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Stocks Rise With Copper on China Loans; Italy Bonds Gain

By Glenys Sim and Stephen Kirkland
February 17, 2014 4:20 PM EST 29 Comments
Copper Factory
Copper Factory

Stocks rose, with a global benchmark index extending its longest rally since 2010, and copper gained after record lending in China boosted prospects for growth in Asia’s largest economy. Italian bonds climbed while gold and silver advanced along with natural gas.

The MSCI All-Country World Index rose a ninth day, adding 0.3 percent by 4:17 p.m. in New York. Standard & Poor’s 500 Index (SPA) futures climbed 0.1 percent, with U.S. markets shut for Presidents’ Day. Copper increased 0.3 percent in London while gold and silver jumped at least 0.8 percent. Natural gas reached a nine-day high. Italy’s 10-year yield fell to an eight-year low as Matteo Renzi was picked to form a government.

China’s aggregate financing, the broadest measure of credit, climbed to 2.58 trillion yuan ($425 billion), the central bank said Feb. 15, spurring optimism the economy will maintain momentum amid government efforts to rein in risky lending. About $1.5 trillion was added to the value of global equities last week, the most in five months, after better-than-estimated Chinese trade data and as Federal Reserve Chair Janet Yellen said they will push on with stimulus cuts.

“The strong new credit growth figures in China should help all risky assets, including equities and commodities,” Slava Smolyaninov, the chief strategist at UralSib Capital LLC in Moscow, wrote in an e-mailed note.

The Stoxx Europe 600 Index rose 0.4 percent, with Vodafone Group PLC contributing the most to the gain, up 1.9 percent. The index climbed 2.5 percent last week, the most this year.

European Movers

Polymetal International Plc gained 4 percent, leading basic-resource stocks higher. SGL Carbon SE jumped 13 percent after Bayerische Motoren Werke AG said the two companies are building a second production hall at a jointly run plant to meet rising demand for carbon fiber.

Neste Oil Oyj lost 4.4 percent after Nordea Bank AB reduced its stock rating on Finland’s only oil refiner.

The MSCI Emerging Markets Index rose 0.7 percent to a three-week high. Benchmark gauges in Indonesia, South Africa, Thailand and Turkey added at least 0.9 percent. Brazil’s Ibovespa slipped 1.3 percent, while Mexico’s IPC Index added 0.1 percent. Japan’s Topix Index (TPX) climbed 0.7 percent after six weeks of declines. Canadian markets were also closed for a holiday today.

The Shanghai Composite Index increased 0.9 percent as the Hang Seng China Enterprises gauge of mainland Chinese companies listed in Hong Kong jumped 1.7 percent.

Local Lending

In addition to aggregate financing, new local-currency lending in China came in at 1.32 trillion yuan for January, the highest level since 2010. Trust loans, under scrutiny because of default risks, were about half the level of a year earlier.

“The money and credit data have reinforced the sense that China’s not on the verge of collapsing and that’s always a positive,” Tim Condon, Singapore-based head of Asian research at ING Groep NV, said by phone.

Thailand’s SET index jumped 1.6 percent and the baht strengthened a third day after police began dismantling anti-government demonstration sites. Gross domestic product in the Southeast Asian nation rose 0.6 percent in the fourth quarter from a year earlier, more than the 0.3 percent median estimate in a Bloomberg survey, official data showed today.

The Philippine peso and Argentina’s peso led gains in emerging-market currencies, gaining at least 0.6 percent versus the dollar. Indonesia’s rupiah climbed to a three-month high as the nation’s current-account deficit narrowed.

Britain’s pound reached $1.6823, the strongest level since November 2009, before weakening 0.2 percent at $1.6711. Rightmove Plc said asking prices for U.K. homes rose 3.3 percent this month from January.

Bond Yields

Italy’s 10-year yield fell seven basis points, or 0.07 percentage point, to 3.61 percent, the lowest level since January 2006. Renzi -- the mayor of Florence and leader of the Democratic Party -- is working on building a parliamentary majority after outlining a 100-day legislative program.

Spain’s 10-year yield touched 3.51 percent, also the lowest rate since 2006. Yields on similar-maturity Portuguese debt reached 4.82 percent, the least since June 2010.

The average yield on bonds from Greece, Ireland, Italy, Portugal and Spain fell to 2.65 percent Feb. 14, the lowest level on record, according to Bank of America Merrill Lynch indexes going back to 1998.

Copper advanced for a second day, while lead, zinc and nickel gained at least 0.7 percent. U.S. natural gas rallied 4.6 percent as chilly weather in the U.S. northeast depleted stockpiles to the lowest level since April. West Texas Intermediate crude oil added 0.6 percent to $100.92 a barrel in electronic trading, while Brent crude was little changed at $109.10 a barrel.

Gold rose as much as 1.5 percent to $1,337.93 an ounce, the highest intraday level since Oct. 31, and silver gained for a 12th day, advancing as much as 2.4 percent to extend its longest run of gains since at least 1968.

Gold tumbled the most since 1981 last year after some investors lost faith in the metal as a store of value and as U.S. policy makers signaled they will slow stimulatory bond purchases. Bullion rebounded 10 percent this year.

To contact the reporters on this story: Glenys Sim in Singapore at gsim4@bloomberg.net; Stephen Kirkland in London at skirkland@bloomberg.net

To contact the editor responsible for this story: Justin Carrigan at jcarrigan@bloomberg.net

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