By Michael Patterson and Chua Kong Ho Dec. 14 (Bloomberg) -- Stocks rose from Shanghai to London as Abu Dhabi provided $10 billion to avert a default by Dubai’s Nakheel PJSC. The euro rose as the bailout eased concern that Europe’s biggest banks would write down loans to the emirate. The MSCI World Index climbed for a third day, gaining 0.4 percent at 10:13 a.m. in London. Dubai’s equity index jumped 10 percent, the most in 14 months, and Nakheel’s $3.52 billion Islamic bond maturing today doubled to 109.5 cents on the dollar. The euro strengthened against 14 of the 16 most-traded currencies, while copper climbed for a second day. Abu Dhabi’s pledge reassured investors who had sent stock markets tumbling last month on concern defaults would slow the global economic recovery. Greek Prime Minister George Papandreou may announce measures to cut the European Union’s biggest budget deficit later today after the nation’s bonds plunged to their lowest in seven months last week. Dubai’s bailout “puts to rest any lingering fears that might have existed about possible contagion,” Tim Condon, head of Asia credit research for ING Groep NV in Singapore, said in an interview. “It’s inevitable that we’re going to see a few more incidents of credit stress show up in both banks and corporates, but in terms of it becoming a macro-economic issue I think Dubai World was as close as we were going to get.” Default Concern Dubai’s Nov. 25 announcement that state-owned Dubai World, the parent of Nakheel, would seek to delay debt repayments stoked concern that a default would add to the $1.7 trillion of credit losses and asset writedowns posted by global financial companies since 2007. The announcement triggered the biggest stock market slump in three months in Asia and Europe’s worst rout since April. Europe’s Dow Jones Stoxx 600 Index advanced 0.6 percent as the region’s banks rallied. The measure declined last week after Fitch downgraded Greece and Standard & Poor’s Ratings Services cut its outlook for Spain, sparking concern there will be more debt-grade reductions. The Stoxx 600 had plunged the most in seven months on Nov. 26, the day after Dubai said it was seeking to delay payments on its debt. HSBC Holdings Plc, which had $15.9 billion in loans and advances to customers in the United Arab Emirates at the end of June, climbed 2.5 percent in London. Standard Chartered Plc, the U.K. bank that gets most of its profit in emerging markets, rose 4.4 percent. National Bank of Greece SA, the nation’s biggest lender, soared 5.6 percent in Athens. The MSCI Asia Pacific Index added 0.5 percent. Samsung C&T Corp., builder of the world’s tallest tower in Dubai, climbed 3.3 percent. Futures Rise Futures on the S&P 500 Index gained 0.5 percent, indicating the benchmark gauge for U.S. equities may extend last week’s advance. The S&P 500 added less than 0.1 percent to 1,106.41 after rising the final three days of the week as data on jobless claims and retail sales signaled the economic recovery is strengthening. The Dubai Financial Market General Index climbed to the highest level this month. Abu Dhabi’s ADX General Index advanced 7.9 percent for the biggest gain since May 2006. Nakheel’s $750 million of Islamic bonds due 2011 surged to 81.4 cents on the dollar from 36 on Dec. 11, according to Citigroup Inc. prices. The MSCI Emerging Markets Index of developing-nation shares climbed for a third day, rising 0.3 percent. The extra yield investors demand to own emerging-market bonds over U.S. Treasuries fell 3 basis points to 2.99 percentage points, the lowest level in two months, according to JPMorgan Chase & Co. Euro Gains The euro rose 0.5 percent against the pound and 0.3 percent versus the dollar. The yen advanced against all 16 most-traded currencies after Japan’s Tankan report, adding 0.7 percent compared with the dollar. The index of manufacturer sentiment climbed 9 points to minus 24 in December, the Bank of Japan said, beating the minus 27 forecast in a Bloomberg News survey of 19 economists. It was still the smallest increase since Japan’s recession ended in the second quarter. The cost of protecting investors against a default by Dubai plunged, with credit-default swaps falling 175 basis points to 375, according to National Australia Bank Ltd. prices at 5:10 p.m. in Sydney. The Markit iTraxx SovX Western Europe index of swaps on 15 governments tumbled 8 basis points to 58.75, according to JPMorgan Chase & Co. Greek bonds fell for the seventh time in eight days, with the yield on the two-year note climbing 13 basis points to 3.06 percent, on concern the government will struggle to pay its debt. Papandreou may announce measures to cut the budget deficit in a speech in Athens today, the prime minister’s press office said yesterday. Greece had its debt downgraded last week by Fitch Ratings. Copper for delivery in three months rose 1.2 percent to $6,915 a metric ton on the London Metal Exchange, leading a gain in industrial metals. Crude oil for January delivery fell 0.5 percent to $69.53 a barrel in New York trading, on speculation growth in demand may falter. Gold for immediate delivery rose 0.8 percent to $1,124.10 an ounce. To contact the reporters on this story: Michael Patterson in London at mpatterson10@bloomberg.net; Chua Kong Ho in Shanghai at Kchua6@bloomberg.net;

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