Global Stocks Rise

Global Stocks Rise; Gold Reaches Record, Treasuries Fall

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By Rita Nazareth and Stephen Kirkland

June 18 (Bloomberg) -- The MSCI World Index of stocks rose for the ninth day, the longest rally in 11 months, and Spanish bonds jumped on speculation efforts to contain Europe’s debt crisis will succeed. Treasuries fell, while gold climbed to a record. Oil reversed losses to rebound above $77 a barrel.

The global index increased 0.3 percent at 12:16 p.m. in New York. The Stoxx Europe 600 Index also climbed for a ninth day, rising 0.2 percent to its highest level in five weeks. The Standard & Poor’s 500 Index gained 0.2 percent after fluctuating earlier as the expiration of futures and options triggered price swings. Spot gold rose as high as $1,262.50 an ounce. Spain’s 10-year bond yield lost 19 basis points.

Spanish banks rallied as European leaders pledged to publish stress tests to boost transparency in the financial industry. Emerging-market equity and bond funds received net inflows in the week to June 16 as concerns over European deficits eased, boosting appetite for higher-yielding assets, EPFR Global data showed.

“The stock gains are very comforting,” said David Kelly, who helps oversee $445 billion as chief market strategist for JPMorgan Funds in New York. “They suggest this is still a bull market. There’s a realization that the measures put in place by European governments and the IMF to deal with the debt issues are sufficient to do the job. It’s likely that the global economic recovery will be able to overcome the speed of the European crisis.”

One-Month High

Shares of commodity producers, consumer companies and financial firms led gains in the S&P 500 among 10 groups. Cisco Systems Inc., DuPont Co. and Exxon Mobil Corp. climbed more than 1 percent for the top advances in the Dow Jones Industrial Average higher. Both gauges are trading above their highest closes in a month.

About three stocks rose for every two that fell on Europe’s benchmark Stoxx Europe 600. Banco Santander SA, Spain’s largest lender, rallied 3.5 percent in Madrid while smaller rival Banco Bilbao Vizcaya Argentaria SA climbed 5.6 percent. Spain’s IBEX 35 Index and Portugal’s PSI-20 increased 2.2 percent, the most among western European benchmark gauges.

“Sentiment has changed to the positive after investors saw that the European debt crisis hasn’t spiralled out of control,” said Daphne Roth, Singapore-based head of Asian equity research at ABN Amro Private Banking.

Spain’s 10-year bond yield dropped to 4.58 percent and the premium investors demand to own the debt instead of benchmark German bunds narrowed by 26 basis points to 185 basis points.

Stress Tests

European Union leaders agreed yesterday to disclose how banks perform on stress tests, seeking to show investors that the financial system can withstand shocks. The decision came after Spanish officials unexpectedly pledged to publish results on individual banks, the first European government to do so. European Central Bank President Jean-Claude Trichet said broader regional stress tests will be published in the second half of July “at the latest.”

Developing-nation stocks rose for a ninth day, the longest stretch of gains in two months. Emerging-equity funds took in $2.5 billion in the past week, the second-largest inflow this year, while emerging-bond funds received $659 million, EPFR said in a statement.

The MSCI Asia Pacific Index gained 0.3 percent. Softbank Corp., the exclusive seller of the iPhone in Japan, climbed 2.7 percent in Tokyo as orders for a new model outstripped supply. Newcrest Mining Ltd., Australia’s biggest gold producer gained 1.7 percent in Sydney.

Yen Gains

The yen gained for a fifth day to 90.78 per dollar, and appreciated 0.5 percent against the euro after the nation’s leaders pledged to reduce public debt. Japanese Prime Minister Naoto Kan said he would consider an opposition party proposal to raise the consumption tax.

Credit-default swaps on the Markit iTraxx Crossover Index of 50 mostly junk-rated European companies dropped 21.5 basis points to a one-month low of 522, according to Markit Group Ltd.

Copper pared earlier losses, slipping 0.3 percent to $2.9155 a pound in New York after earlier sinking as much as 2.1 percent.

The Reuters/Jefferies CRB Index of commodities rose 0.3 percent, erasing an early 0.7 percent slump and extending its five-day advance to 3.2 percent, on pace for its best week since the beginning of April.