By Whitney Kisling Jan. 13 (Bloomberg) -- Sentiment toward stocks rose around the world, reaching a record level in the U.S., as reports on manufacturing showed the global economy is recovering and investors bet that profits grew for the first time since 2007. Investors forecast gains in each of the nine countries represented in the Bloomberg Professional Confidence Survey for the first time since the data began in 2007. The sentiment measure for the Standard & Poor’s 500 Index climbed 35 percent to 54.37. That’s only the second time the reading exceeded 50, signaling participants anticipate a rally in the next six months. The responses from 4,101 Bloomberg users were gathered Jan. 4-8 as the MSCI World Index added 2.6 percent. Rising factory output in the U.S., China and Europe helped send the S&P 500 to six straight gains to begin the year. Analysts estimate that fourth-quarter earnings reports beginning this week will show S&P 500 profit rose 62 percent, according to data compiled by Bloomberg. The results will follow the biggest annual rally since 2003 for the MSCI World Index of equities in 23 developed nations. “The market is clearly in an upside trend,” said Luis Benguerel, a trader at Interbrokers Espanola in Barcelona, Spain, who participated in the survey. “As long as we keep getting these macro figures and companies do as good as analysts expect them to do, that’s enough to keep this trend going.” The MSCI World has rebounded 74 percent from a 13-year low in March after the Federal Reserve left its benchmark interest rate at almost zero and the U.S. government lent, spent or guaranteed as much as $9.66 trillion to end the recession and unlock credit markets. Surge in Manufacturing U.S. factory output expanded in December at the fastest pace in more than three years, according to a report from the Tempe, Arizona-based Institute for Supply Management. Chinese manufacturing surged the most since April 2004 last month, data compiled by London-based HSBC Holdings Plc and Markit Economics showed. Production increased for a third month in December, Markit said. The three reports were released Jan. 4. The Bloomberg sentiment indexes for the U.S., Japan and Spain rose above 50 and reached all-time highs. The U.K. gauge topped 50 for the first time since October, while Switzerland climbed to a record. Spain exceeded 50 for the first time, adding 17 percent to 51.41. Confidence in Switzerland climbed 3.6 percent to 60.89, and the U.K. index surged 22 percent to 55.61. The measures for Italy, France and Germany increased 14 percent, 3.7 percent and 2.4 percent to 62.61, 57.77 and 53.33, respectively. Rally This Year The Dow Jones Stoxx 600 Index of European equities may advance 9.2 percent through the end of 2010 as the economy grows, strategists at New York-based Citigroup Inc. wrote in a Jan. 4 report. Signs that the global economy is rebounding from its first recession since World War II have helped push prices on the MSCI World to 34.7 times profit from the past year at its 1,656 companies. That’s the most expensive valuation since 2002, making equities vulnerable should earnings fail to materialize. Alcoa Inc., the biggest U.S. aluminum producer, began earnings season on Jan. 11 by missing the average analyst profit forecast. The S&P 500 lost 0.9 percent following the New York-based company’s report. ‘Fear Gets Heightened’ “Alcoa’s bottom-line number was not good and investors are selling because expectations were high,” said Mark Bronzo, a money manager in Irvington, New York, at Security Global Investors, which oversees $21 billion. “The fear gets heightened.” The Bloomberg survey showed sentiment surged the most in Japan, jumping 41 percent to 64.71, as the Nikkei 225 Stock Average rallied for the sixth straight week. Brazil’s indicator climbed 17 percent to 78.83, the highest level among national indexes, after the Bovespa index gained 2.4 percent to begin the year. Brazilian stocks were boosted by the Reuters/Jefferies CRB Index of commodities reaching an almost 15-month high. “The momentum is going to stay to the positive side,” Mary Ann Bartels, a New York-based analyst at Bank of America Corp. who studies charts to make forecasts, said in a Bloomberg Television interview on Jan. 6. She was the second- ranked technical analyst in Institutional Investor magazine’s 2009 survey. “In the first quarter, what the indicators are telling us is that the trend is up.” Bartels sees the S&P 500 rising to 1,230, or 8.3 percent higher than yesterday’s closing price.

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