By Justin Carrigan Jan. 28 (Bloomberg) -- Stocks rallied, with the MSCI World Index snapping its longest losing streak in almost a year, and high-yield currencies and oil rose after the Federal Reserve said for the first time the U.S. economy is in a recovery. The MSCI Index of 23 developed nations’ stocks advanced 0.5 percent at 10:17 a.m. in London, after falling for six straight days. Futures on the Standard & Poor’s 500 Index increased 0.5 percent. Europe’s Dow Jones Stoxx 600 Banks Index gained 2.4 percent as U.S. President Barack Obama said in his first State of the Union address he isn’t “punishing” financial companies. The Australian and New Zealand dollars strengthened the most against the yen and the dollar. Crude oil rose 1 percent. Fed policy makers yesterday upgraded their economic outlook and pledged to keep interest rates at a record low for an “extended period,” helping offset investor concern this week that China is withdrawing stimulus. Almost 80 percent of the companies in the S&P 500 that have reported earnings so this quarter far have beaten analysts’ estimates, according to data compiled by Bloomberg. Ford Motor Co. and Microsoft Corp. are scheduled to report today. “Investors are shifting attention to the fact that the overall recovery remains intact and there may be upgrades in earnings estimates,” said Chu Moon Sung, fund manager at Shinhan BNP Paribas Asset Management Co., which manages $26 billion. “Uncertainties that overwhelmed markets in the past few days such as tightening concerns in China are subsiding.” European Gains The Dow Jones Stoxx 600 Index rose 1.2 percent, its biggest gain since the first trading day of the year. The measure has declined 3.9 percent from its Jan. 19 high, as Obama called for limits on risk-taking by banks and China moved to restrict lending and cool the fastest economic growth since 2007. Hennes & Mauritz AB, Europe’s second-biggest clothing retailer, jumped 7.2 percent in Stockholm as its earnings beat estimates. British Sky Broadcasting Group Plc, the U.K.’s biggest pay-television provider, added 2 percent in London after reporting a record gain in high-definition TV clients and fewer cancellations. Canon Inc., which generates 28 percent of its revenue in the Americas, advanced 1.8 percent in Tokyo after forecasting its biggest profit increase in a decade. The MSCI Emerging Markets Index rose 1.3 percent, heading for the biggest advance in almost four weeks. The 22-country benchmark index snapped its longest losing streak in a year after declines during the past six trading sessions sent the gauge down 9.7 percent from a 2010 peak. Futures Advance The gain in U.S. futures indicated the S&P 500 may extend yesterday’s 0.5 percent advance. Economic reports may show the recovery is gaining momentum. Orders for goods meant to last several years probably climbed in December, economists said before Commerce Department figures due at 8:30 a.m. in Washington. A separate report from the Labor Department may show fewer Americans sought jobless benefits last week. A record nine-quarter earnings slump for S&P 500 companies is projected to have ended in the fourth quarter with a 73 percent increase in profits. More than 130 companies in the index are scheduled to release results this week. Procter & Gamble Co. and Amazon.com Inc. also are reporting today. The Australian dollar strengthened 1.4 percent against the yen and 0.9 percent versus the U.S. dollar as optimism the economic recovery is gaining momentum spurred demand for higher- yielding currencies. The New Zealand dollar climbed 1.3 percent and 0.8 percent, respectively. The Dollar Index, which tracks the U.S. currency against those of six major trading partners, snapped a two-day advance, falling 0.1 percent. Gilts Drop U.K. gilts led declines in government bonds, with the yield on the 10-year note rising 7 basis points to 3.95 percent. The yield on the 10-year U.S. Treasury climbed 2 basis points to 3.67 percent, the highest level in a week. Greek bonds extended losses amid concern the government will struggle to narrow a budget deficit of almost 13 percent of GDP last year, the highest in the European Union. The 10-year note yield rose 8 basis points to 6.83 percent, adding to yesterday’s 51 basis-point gain. The extra yield, or spread, that investors demand to hold the securities instead of benchmark German bunds widened 4 basis points to 360 basis points, the most since December 1998. Copper for delivery in three months fell 1.2 percent to $7,145 a metric ton on the London Metal Exchange on concern that demand may wane in China. Aluminum and nickel also retreated. Gold for immediate delivery rose 0.4 percent to $1,092.32 an ounce in London. To contact the reporter on this story: Justin Carrigan in Copenhagen at swallace6@bloomberg.net

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