BLBG: Stocks Advance, Led by Financial Shares; Pound, Yen Decline
By Daniel Hauck
Aug. 6 (Bloomberg) -- Global stocks rose for the fifth time in six days, led by financial shares, as KBC Group NV reported a surprise profit and an industry group predicted U.K. house prices will increase this year. The pound and yen fell.
The MSCI World Index of 23 developed nations added 0.4 percent at 12:58 p.m. in London, and the MSCI Emerging Markets Index advanced 0.4 percent. The pound dropped versus the dollar and Treasuries rose as the Bank of England expanded its asset- purchase plan by 50 billion pounds ($84 billion), while the yen weakened against 14 of the 16 most-traded currencies.
Companies in the MSCI World reporting profit that beat analysts’ estimates in the second quarter outnumbered those that missed by more than two-to-one, according to data compiled by Bloomberg, after central banks flooded the world’s financial system with trillions of dollars. The European Central Bank left interest rates at a record low today amid efforts to strengthen the economy.
“We can start to say the worst is over for banks, thanks to inexpensive money from the central banks,” said Lionel Heurtin, a fund manager at Ofi Asset Management in Paris, which oversees $24 billion.
Europe’s Dow Jones Stoxx 600 Index increased 1 percent as a gauge of banks climbed 3.1 percent, while the MSCI Asia Pacific Index rose 0.6 percent.
KBC, Aviva
KBC surged 19 percent. The recipient of 7 billion euros ($10.1 billion) in Belgian bank-rescue funds reported a surprise profit as the value of its collateralized debt obligations increased. Aviva Plc rose 6.9 percent after the U.K.’s second- biggest insurer by market value swung to a first-half profit as margins on sales of life-insurance policies increased.
Unilever climbed 5.4 percent in Amsterdam after the world’s second-largest consumer-goods maker beat analysts’ estimates for western European sales growth, helped by price cuts.
Standard & Poor’s 500 Index futures added 0.4 percent before a weekly report on initial jobless claims. The benchmark gauge for U.S. equities yesterday fell from a nine-month high after data on job losses and service industries were worse than economists estimated.
MBIA Inc. jumped 17 percent in German trading. The largest bond insurer by total guarantees posted a profit of $894.7 million after recording $1.1 billion in pretax estimated recoveries.
Russian, Chinese Stocks
The Micex index of Russian stocks advanced 1.9 percent as a gauge of the economy showed the contraction in July was the smallest this year. Gross domestic product shrank 2.9 percent from a year earlier, compared with a contraction of 4.8 percent in June, according to VTB Capital’s indicator.
China’s stocks declined for a second day, led by brokerages and commodities producers, on speculation the central bank will rein in lending to avert bubbles in equities and property. The Shanghai Composite Index lost 2.1 percent after the People’s Bank of China said in a quarterly report it will fine-tune monetary policy where necessary and guide loan growth.
The Australian dollar climbed 0.4 percent against the yen after the nation’s statistics bureau said the number of people employed in the country unexpectedly rose in July. South Africa’s rand dropped the most in almost a month versus the U.S. dollar after house prices slid.
The pound dropped after the Bank of England signaled efforts to cut borrowing costs and boost the economy have yet to succeed. The British currency fell 0.7 percent to $1.6871 and 0.6 percent to 85.33 pence per euro.
Bank of England
The Bank of England raised its so-called quantitative easing program to 175 billion pounds. The ECB left its main refinancing rate at an all-time low of 1 percent.
The pound earlier traded near a nine-month high against the dollar after the Royal Institution of Chartered Surveyors said U.K. house prices will increase this year, reversing an earlier prediction for a drop of as much as 15 percent.
The yield on the 10-year Treasury note dropped 3 basis points to 3.72 percent after the Bank of England’s decision.
Copper fell 1.9 percent to $6,079.75 a metric ton on the London Metal Exchange, declining for the first time in six days. Aluminum, nickel and zinc also snapped five days of gains. Wheat and corn retreated in Chicago trading and soybeans fell.
The cost of protecting European corporate bonds from default fell, according to traders of credit-default swaps, with the Markit iTraxx Crossover Index of 45 companies with mostly high-yield credit ratings tumbling 15 basis points to 585, according to JPMorgan Chase & Co. prices. That’s the biggest decline in a week and signals an improved perception of credit quality.
To contact the reporters on this story: Daniel Hauck in London at dhauck1@bloomberg.net.
