European stocks and commodities rose to two-year highs on speculation the economic recovery will continue. The euro pared gains as the threat of a rating downgrade for Portugal offset China’s comments that it has taken “concrete action” to ease the sovereign debt crisis. The Stoxx Europe 600 Index rallied 0.4 percent at 12:18 p.m. in London to its highest level since Lehman Brothers Holdings Inc.’s collapse, while futures on the Standard & Poor’s 500 Index gained 0.3 percent. Copper and cotton rose to records. The euro appreciated 0.2 percent to $1.3162, after earlier reaching $1.3202. The cost of insuring Portuguese bonds against default climbed to a three-week high. The pound weakened after a report showed the U.K. budget deficit swelled to a record in November. China backs European Union efforts to ensure financial stability, Vice Premier Wang Qishan said today. Moody’s Investors Service said it may cut Portugal’s bond grade by one or two levels, citing the economy’s “sluggish” growth outlook. Data scheduled for release tomorrow may show the U.S. economy expanded more in the third quarter than previously estimated. “We are still in an environment of very easy liquidity provisioning in combination with strong global growth and that makes for a robust picture for the equity markets,” said Elwin de Groot, senior market economist at Rabobank in Utrecht, the Netherlands. “The impact of the rating downgrades or the prospects of further downgrades of a number of sovereigns hasn’t had a major impact.” Acquisition Targets More than three companies gained for every one that fell on the Stoxx 600. Mining companies led the advance, as Rio Tinto Group jumped 2.4 percent and BHP Billiton Ltd. rallied 1.8 percent. Royal DSM NV rose 4.2 percent after agreeing to buy U.S.-based Martek Biosciences Corp. for $1.09 billion. Nordic papermakers’ shares soared after UPM-Kymmene Oyj agreed to buy paper producers Myllykoski Oyj and Rhein Papier GmbH, prompting analysts to cite improved chances for more mergers in the industry. The MSCI Asia Pacific Index jumped 1.1 percent, while the Shanghai Composite Index rallied for the first time in five days, rising 1.8 percent after a survey showed property sales increased in most Chinese cities during the past week. The gain in U.S. futures indicated the S&P 500 may rise for a fourth day after yesterday closing at the highest level since September 2008. Adobe Systems Inc. climbed 5.7 percent in early New York trading as the top maker of graphic-design programs forecast profit that beat analysts’ estimates. U.S. gross domestic product expanded at a 2.8 percent annual pace in the third quarter, quicker than the 2.5 percent estimate published last month, the Commerce Department will say tomorrow, according to a Bloomberg News survey of economists. Commodities Jump The S&P GSCI index of 24 commodities climbed as much as 0.4 percent to the highest level since Oct. 1, 2008, led by a 3.2 percent jump in cotton futures on demand in China, the world’s largest buyer of the fiber. Copper climbed 1.2 percent to $9,311 a metric ton and earlier today jumped to an all-time high of $9,327 a ton. The yield on the Portuguese 10-year bond increased three basis points to 6.73 percent, while the extra yield investors demand to hold the securities instead of benchmark German bunds rose for a third consecutive day. The yield on the 10-year U.S. Treasury dropped four basis points to 3.31 percent. The euro appreciated 0.1 percent to 110.12 yen, snapping a four-day decline. The Dollar Index, which tracks the U.S. currency against those of six trading partners, fell 0.2 percent. The pound weakened, falling 0.3 percent to $1.5461 and depreciating 0.6 percent to 85.13 pence per euro. The Swiss franc strengthened against all 16 of its most-traded counterparts, climbing to a record versus the euro for a fifth straight day. Heavy Snowfall Air travel disruptions rippled across Europe for a fourth day in the countdown to Christmas as most of Frankfurt airport was closed this morning after heavy snowfall. London’s Heathrow airport is operating at a third of capacity as snow, ice and frigid temperatures turned rail and road travel into chaos. U.K. natural gas prices fell after National Grid Plc yesterday issued the second gas balancing alert so far this winter, attracting more supply of the heating fuel. Gas for delivery tomorrow fell 4.6 percent from a two-year high to 62.75 pence a therm, according to broker data compiled by Bloomberg. That’s equal to $9.70 a million British thermal units. To contact the reporter on this story: David Merritt in London on dmerritt1@bloomberg.net To contact the editor responsible for this story: Mark Gilbert at magilbert@bloomberg.net

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