By Michael Patterson and David Merritt Jan. 18 (Bloomberg) -- Oil rose for the first time in six days, driving shares in Canada and emerging markets higher, on speculation demand will rebound this year as the global economy recovers. The pound strengthened after a survey showed U.K. house prices increased. Crude oil advanced 0.9 percent to $78.68 a barrel in New York, while copper added 1.4 percent. Canada’s Standard & Poor’s/TSX Composite Index increased 0.4 percent, while Russia’s Micex Index rose to a 17-month high. U.S. markets are closed today for the Martin Luther King Jr. holiday. China’s crude oil imports may increase 15 percent this year as the world’s second-biggest energy consumer starts building the next phase of its strategic oil reserves, China Oil, Gas & Petrochemicals forecast. International Monetary Fund Managing DirectorDominique Strauss-Kahn said in Tokyo it’s too early for policy makers to withdraw stimulus packages that are resuscitating global growth. “Cyclical trends remain supportive for commodities as an asset class,” Dmitriy Kolomytsyn, a Morgan Stanley analyst in Moscow, wrote in a report today. He raised price estimates for Russian metals and mining stocks by 28 percent on average. Europe’s Dow Jones Stoxx 600 Index advanced 0.7 percent as the gains in metals prices boosted the earnings outlook for basic-resource producers. The gauge pared some of its gains after International Power Plc said it hadn’t reached an agreement with GDF Suez SA on an industrial tie up. Oil Demand Crude oil for February delivery rose as much as 68 cents in electronic trading on the New York Mercantile Exchange. China’s crude oil storage capacity will reach 44.6 million cubic meters by 2011, the fortnightly newsletter published by the official Xinhua News Agency said. The Micex index advanced 1.9 percent as Morgan Stanley upgraded commodity producers and UBS AG said the rally in world’s best-performing equity market in 2009 has more to go. Brazil’s Bovespa index added 0.7 percent, while the S&P/TSX Composite Index increased for the first time in three days as Petroleo Brasileiro SA and EnCana Corp. climbed. Greece’s Athens Stock Exchange General Index sank 2.5 percent as European finance ministers scrutinized plans to curb the nation’s budget deficit. Alpha Bank SA, the nation’s third- largest bank, slipped 7.7 percent in Athens. Hellenic Telecommunications Organization SA, Greece’s biggest telephone- services provider, slid 2.5 percent. Greek Deficit Greece is struggling to cut a 2009 budget deficit that may reach 12.7 percent of gross domestic product, the highest in the euro region. Moody’s Investors Service said on Jan. 13 the Greek and Portuguese economies may face a “slow death” as they dedicate a higher proportion of their wealth to paying off debt. The euro fell to near its lowest level in a week against the dollar, losing as much as 0.4 percent to $1.4335, almost matching its weakest level since Jan. 8. It recently traded at $1.4375. “If the EU decides to bail out Greece, either via the European Central Bank or direct by other euro members, it would deliver a bad signal to other euro-zone countries,” Jennifer Underwood, a strategist at Europe Arab Bank Plc in London, wrote in a note. “Should no bailout be forthcoming and there is a Greek sovereign default, not only would the euro come under some heavy pressure on the foreign-exchange markets, the weaker euro members would come under attack.” The pound advanced against 14 of its 16 most-traded counterparts, and traded at less than 88 pence per euro for the first time since Sept. 15, after a survey showed U.K. house prices increased in January. Asian Shares Fall The yield premium, or spread, investors demand to hold Greek 10-year bonds rather than those of Germany, Europe’s benchmark borrower, narrowed 4 basis points to 269 basis points, after earlier jumping to 278 basis points, within 1 basis point of the widest level since March. The corresponding spread for Portuguese 10-year notes widened 2 basis points to 94. The gap for Spanish debt increased by 3 basis points to 73. A basis point equals 0.01 percentage point. The MSCI Asia Pacific Index dropped 0.4 percent, snapping four weeks of gains, after JPMorgan Chase & Co. reported a loss in retail banking after Asian markets closed on Friday and U.S. consumer confidence trailed forecasts. Nissan Motor Co., which gets about 35 percent of its sales from North America, slumped 2.6 percent in Tokyo. China Mobile Ltd. declined 2.5 percent in Hong Kong, leading declines by telecommunications stocks. To contact the reporter on this story: Michael Patterson in London at mpatterson10@bloomberg.net.

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