By Michael P. Regan and Stuart Wallace Nov. 23 (Bloomberg) — Stocks rose around the world and the dollar and the yen fell as sales of U.S. homes increased more than forecast and speculation grew that central banks will keep interest rates near record lows. The Standard & Poor’s 500 Index rallied 1.2 percent to 1,104.94 at 2:09 p.m. in New York, near a 13-month high on a closing basis. Europe’s Dow Jones Stoxx 600 Index jumped 2 percent, its best gain in six weeks. Copper rallied to a 14- month high and gold reached a record as the Dollar Index fell for the first time in three days. Sales of existing U.S. homes increased 10 percent in October to the highest level since February 2007, National Association of Realtors data showed today. Economic reports this week will show rising export orders in Taiwan and South Korea, according to Bloomberg News surveys of economists’ forecasts. “What may be perceived as strength in commodities or equity prices can just as easily be seen as weakness in the value of the dollar,” said Kevin Caron , a market strategist in Florham Park, New Jersey, at Stifel Nicolaus & Co., which manages about $98 billion in client assets. “What you’re seeing is an unprecedented array of government and taxpayer funded efforts to revive the economy, and they’re doing it, in the United States of course, at the expense of the dollar.” Global stocks also advanced amid speculation U.S. policy makers will keep borrowing costs near record low levels. Charles Evans , president of the Federal Reserve Bank of Chicago, told the Financial Times that U.S. interest rates may stay near zero until “late 2010, perhaps later.” ‘Some Comfort’ Evans’s comment “is going to provide the market with some comfort in the near term, allow asset markets and higher-risk markets to continue to move higher,” Ian Stannard , a foreign- exchange strategist in London at BNP Paribas SA, said today in a Bloomberg Television interview. That “will keep the dollar under pressure for the time being,” he said. All 10 industry groups in the S&P 500 advanced, led by technology and financial companies. Deere & Co. and Schlumberger Ltd. rallied more than 2.1 percent after analysts advised buying the shares. Verizon Communications Inc., General Electric Co. and Exxon Mobil Corp. climbed more than 1.8 percent to lead the Dow Jones Industrial Average up 119.48 points, or 1.2 percent, to 10,437.64. The MSCI World Index of 23 developed nations added 1.7 percent, its biggest gain on a closing basis in two weeks. BHP Billiton Ltd. , the world’s biggest mining company, and Rio Tinto Group rallied at least 3.5 percent in London. Renault SA , Europe’s second-biggest automaker, increased 3.8 percent in Paris after Credit Suisse Group AG advised buying the shares. Asia Advances The MSCI Asia Pacific Index rose 0.7 percent. China Construction Bank Corp., the nation’s second-biggest lender, gained 4.1 percent in Hong Kong after Zhang Ping , chairman of the National Development and Reform Commission, said China will favor “consistent, stable” policies on the economy. James Hardie Industries NV , the top seller of home siding in the U.S., surged 6.4 percent in Sydney after forecasting earnings at the top end of its range. Copper for March delivery rose 1.9 percent to $3.1945 a pound in New York and climbed as high as $3.204. Nickel, zinc and tin also gained. Gold touched $1,174 an ounce in London as the slumping dollar boosted bullion’s appeal as an alternative asset. The U.S. dollar and yen dropped versus major counterparts as commodities and stocks advanced, spurring demand for riskier assets. The Dollar Index , which IntercontinentalExchange Inc. uses to track the greenback against the currencies of six major U.S. trading partners, decreased 0.7 percent to 75.119. It slid to 74.679 on Nov. 16, the lowest level since August 2008. South Africa’s rand was the biggest winner versus the yen and dollar among the major currencies tracked by Bloomberg as the gain in commodities and stocks encouraged carry trades, in which investors buy higher-yielding assets with amounts borrowed in nations with low interest rates. The rand strengthened 1.9 percent against the yen and 1.6 percent against the dollar. Treasury Auctions Treasuries were little changed after the U.S. sold a record-tying $44 billion of two-year debt at the lowest yield ever, the first of three note sales this week totaling a record $118 billion. The U.S. will sell $42 billion of five-year securities tomorrow and $32 billion of seven-year debt in two days. The yield on the current two-year note rose one basis point to 0.74 percent. James Bullard, the St. Louis Fed president, said he favors the U.S. central bank seeking authority to continue buying mortgage-backed bonds after the first quarter of next year to bolster bank liquidity. International Monetary Fund Managing Director Dominique Strauss-Kahn told a Confederation of British Industry conference that “we don’t see a high probability of a double dip,” in the global economy, though avoiding that outcome isn’t “a done deal.” Emerging Markets Developing-nation stocks rose, led by shares in Hungary and Poland, as the MSCI Emerging Markets Index climbed 1.2 percent, its biggest gain in a week. OTP Bank Nyrt., Hungary’s largest lender, rallied 4.7 percent after the central bank cut the benchmark interest rate to the lowest in more than three years. The Czech koruna, Polish zloty and Hungarian forint all climbed at least 0.9 percent against the dollar. Mexico’s Bolsa Index gained 1.3 percent even after Fitch Ratings downgraded the nation’s foreign-currency rating to BBB from BBB+, saying the recession has “accentuated weakness” in the country’s fiscal profile. The Micex Index of stocks in Russia, the world’s biggest energy-exporting economy, increased 1.6 percent to the highest value since Nov. 18. The Tel Aviv 25 Index climbed 1 percent even as the Bank of Israel unexpectedly raised the benchmark interest rate for a second time since the global economy began to recover as growth accelerated and inflation approached the top of the government’s target range. The Dubai Financial Market General Index increased 1.6 percent, the biggest gain in a week. The benchmark rebounded from a 2.6 percent decline yesterday after the emirate’s ruler, Sheikh Mohammed Bin Rashid Al Maktoum , fired a senior aide and removed three others. Large-Caps Outperform For the first time since the equity rally began in March, the biggest U.S. stocks are beating the smallest as the dollar’s descent sends investors to companies with the most business in international markets. The Dow Jones Industrial Average of companies with $111.4 billion in median market value rose 6.2 percent this quarter through last week, compared with the 2.6 percent loss by the Standard & Poor’s SmallCap 600 Index, whose members are worth $572.3 million on average. The Dow had trailed by 26 percentage points following the stock market’s low on March 9. A benchmark gauge of corporate credit risk in the U.S. fell for the first time in three days as stocks gained. Credit-default swaps on the Markit CDX North America Investment-Grade Index Series 13, which is linked to 125 companies and used to speculate on creditworthiness or to hedge against losses, fell 2.75 basis points to 100.25 basis points as of 10:51 a.m. in New York, according to broker Phoenix Partners Group. The swaps typically fall as investor confidence improves. Borrowers have sold a record $1.171 trillion in U.S. corporate bonds in 2009, surpassing the amount sold in 2007, according to data compiled by Bloomberg. Sales of investment-grade and high-yield, high-risk debt compare with the more than $1.167 trillion that companies sold in all of 2007, a record year for corporate bond issuance, Bloomberg data show. To contact the reporters on this story: Michael P. Regan in New York at mregan12@bloomberg.net ; Stuart Wallace in London at swallace6@bloomberg.net
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Stocks Gain Around World on Economic Growth Outlook as Dollar, Yen Decline
