April 7 (Bloomberg) -- U.S. stocks rose for a third day, led by mining and banking shares, after analysts raised their price forecasts for metals and private-equity funds proposed a $5 billion investment in Washington Mutual Inc.
Newmont Mining Corp. and Freeport-McMoRan Copper & Gold Inc. led the Standard & Poor's 500 Materials Index to a record after Citigroup Inc. boosted projections for copper, nickel, lead and aluminum. Washington Mutual, the largest U.S. savings and loan, rallied the most in two weeks on plans to shore up its balance sheet. Stocks in Asia rose to a five-week high and all 18 national markets advanced in Europe.
``Most of today's current prices are discounting disaster,'' Douglas Ciocca, a money manager at Renaissance Financial Corp. in Leawood, Kansas, which manages $1.7 billion, said in an interview with Bloomberg Radio. ``Anything short of that is somewhat encouraging for the market.''
The S&P 500 added 7.37 points, or 0.5 percent, to 1,377.77 at 10:22 a.m. in New York. The Dow Jones Industrial Average gained 40.95, or 0.3 percent, to 12,650.37. The Nasdaq Composite Index increased 8.27, or 0.4 percent, to 2,379.25. More than three stocks advanced for every two that fell on the New York Stock Exchange.
The S&P 500 has risen 8.1 percent from an almost 19-month low on March 10 as interest-rate cuts and other measures by the Federal Reserve gave support to banks suffering from $232 billion in credit losses and asset writedowns since the beginning of 2007. The index is still 12 percent below its October record.
Metal Producers Rally
Newmont, the world's second-largest gold producer, climbed 75 cents to $47.57. Freeport-McMoRan, the biggest copper company, added $3.51 to $111.20. Aluminum, copper, nickel and lead price forecasts for this year were raised by Citigroup. Copper advanced in Asia as investors speculated the Federal Reserve will lower borrowing costs this month, weakening the dollar and increasing the appeal of commodities as a haven.
U.S. Steel Corp. gained $7.29 to $147.99 after being upgraded to ``overweight'' from ``equal-weight'' at Morgan Stanley, which said increasing steel prices will boost earnings. The brokerage also rated Steel Dynamics Inc., the fourth-largest U.S.-based steel producer by market value, as ``overweight'' in new coverage, while downgrading Nucor Corp. to ``equal-weight'' from ``overweight.'' Shares of Steel Dynamics rose $1.80 to $37.73. Nucor added $1.67 to $72.21.
Producers of raw materials in the S&P 500, the only group among 10 industries to advance this year, rallied for a fifth day.
Washington Mutual
Washington Mutual, which had lost 74 percent of its market value in the past 12 months, gained $1.74, or 17 percent, to $11.91. Negotiations with the TPG group are at an advanced stage, said a person familiar with the discussions, who declined to be identified because an agreement hasn't yet been reached. Washington Mutual needs the funds after reporting more than $3 billion of home-mortgage writedowns and loan losses.
Separately, Merrill, the third-largest securities firm, raised European banks to ``neutral,'' saying credit markets are ``past their worst'' and banks have acknowledged the extent of the crisis.
Citigroup, the biggest U.S. bank, gained 68 cents to $24.76. Bank of America Corp., the second-biggest U.S. bank, added 53 cents to $39.94.
Earnings Season
Alcoa Inc., the world's third-largest aluminum producer, is scheduled to release first-quarter results after the close of trading today, the first company in the Dow average to do so. Earnings at S&P 500 companies probably fell an average of 11.3 percent from a year earlier in the first quarter, according to analyst estimates compiled by Bloomberg. That would be the third consecutive quarterly decline, the longest streak in six years. Alcoa gained 4 cents to $39.04.
``Unless we hit some potholes, the market is going to have a little bit of fuel here,'' Christopher Johnson, chief investment strategist at Johnson Research Group in Cincinnati, said in an interview on Bloomberg Television.
Exxon Mobil Corp., the largest U.S. oil company, added 77 cents to $89.51 and Chevron Corp., the second-biggest, gained 70 cents to $88.75.
Crude oil rose more than $2 a barrel as the dollar pared earlier gains against the euro, prompting investors to purchase commodities. Oil for May delivery gained $2.03, or 1.9 percent, to $108.26 a barrel in New York.
Apple
Apple Inc. added $3.42 to $156.50. Shares of the maker of the iPod media player were raised to ``overweight'' from ``market weight'' at Thomas Weisel Partners. The shares were also rated ``overweight'' in new coverage by Atlantic Equities LLP. The price estimate is $190 per share.
Yahoo! Inc., the Internet company that snubbed a $44.6 billion takeover bid from Microsoft Corp., fell 64 cents to $27.72 after the world's largest software maker threatened to cut its bid if directors fail to give in soon.
If Yahoo's directors refuse to negotiate a deal within three weeks, Microsoft plans to nominate a board slate and take its case to investors, Chief Executive Officer Steve Ballmer said April 5 in a statement. He suggested the deal's value might decline if Microsoft has to take those steps. Microsoft gained 33 cents to $29.49.
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