Stocks Rise on Earnings

Stocks Rise on Earnings, Economy; Egyptian Bonds, Wheat Rally

By Stephen Kirkland and Rita Nazareth

While Egypt’s stock exchange, seen here, remained closed, banks are reopening and the government plans to resume selling Treasury bills today, Deputy Central Bank Governor Hisham Ramez said. Photographer: Andrew Burton/Bloomberg

Stocks climbed, driving benchmark European and U.S. indexes to 2 1/2-year highs, as takeovers, faster global growth and reduced tension in Egypt boosted investor optimism in the economy. U.S. Treasuries fell, while Egyptian bonds rallied and the nation’s currency weakened.

The Standard & Poor’s 500 Index rose 0.3 percent to 1,314.59 and the Stoxx Europe 600 Index gained 0.8 at 9:36 a.m. in New York. The 10-year Treasury yield climbed for a sixth day, gaining five basis points to 3.68 percent. The yield on Egypt’s 2020 bond sank 37 basis points to an eight-day low. Wheat rose 1 percent and copper jumped to a record in London.

Beckman Coulter Inc. and Pride International Inc. jumped at least 9.7 percent after receiving takeover bids, two of 17 U.S. deals announced today worth a total of almost $16 billion. About two-thirds of MSCI World Index companies that reported quarterly earnings have topped estimates. India predicted its economy will expand the most in three years and Indonesia grew at the fastest pace in six years. Investor sentiment also improved as Egypt’s politicians took steps to resolve the crisis.

“More and more people and companies see the economic recovery as sustainable,” said Joseph Veranth, chief investment officer at Dana Investment Advisors in Brookfield, Wisconsin, which manages $2.8 billion. “It’s no surprise that there are so many M&A deals going on. Earnings have been good and that’s indication that companies will have more cash to fund those deals.”

Dow’s 6-Day Rally

The S&P 500 rose for a third day and the Dow climbed for a sixth, its longest streak since November. Consumer credit increased by $2.5 billion in December after increasing $1.35 billion in November, economists forecast the Federal Reserve will say at 3 p.m. today in Washington. Other reports this week may show consumer confidence improved this month and claims for jobless benefits fell.

More than three stocks rose for every one that fell in Europe’s Stoxx 600. Basic-resources stocks led the rally, as Rio Tinto Group gained 2 percent and Xstrata Plc added 3.5 percent. Solarworld AG jumped 9.6 percent after the German solar-cell manufacturer said earnings increased. GEA Group AG climbed 5.8 percent after saying it will boost its dividend. Julius Baer Group Ltd. gained 2.4 percent on a share buyback.

“The outlook for the equity market is good,” said Mike Lenhoff, chief strategist in London at Brewin Dolphin Securities Ltd., whose parent company oversees $33 billion. Earnings are supportive and “the momentum behind the U.S. economy is clearly improving,” he said.

Treasuries Slump

The six-day decline in the 10-year Treasury note is the longest losing streak since Oct. 27. The yield on the U.K. two- year gilt jumped six basis points to 1.58 percent. The implied yield on the short sterling futures contract expiring in December was four basis points higher at 1.74 percent as investors added to bets that borrowing costs will increase.

The cost of insuring against a default on European junk bonds fell, with the Markit iTraxx Crossover Index of credit- default swaps declining 11 basis points to 393, the lowest since Jan. 11, 2010, according to JPMorgan. The Markit iTraxx Financial Index of swaps on 25 banks and insurers dropped 1.5 basis points to a two-month low of 153.5.

Egypt Debt Risk

Credit-default swaps on Egyptian debt fell 27 basis points to 339, the lowest since Jan. 25 on a closing basis. The Egyptian pound slid 1.6 percent. Orascom Construction Industries, the country’s biggest publicly traded builder, rose 5.6 percent in London, extending gains since Egypt’s equity market closed on Jan. 27 to 13 percent. Commercial International Bank Egypt SAE surged 5.9 percent.

The government sold 13 billion Egyptian pounds ($2.2 billion) of the total 15 billion pounds offered of 91-day, 182- day and 273-day bills, according to data compiled by Bloomberg.

Egypt’s stock exchange will remain closed until Feb. 13, the bourse said today. Vice President Omar Suleiman, who met with some opposition leaders yesterday, promised a draft list within a month of constitutional changes needed for free elections.

The MSCI China Index of mostly Hong Kong-traded Chinese shares dropped 1.8 percent on concern policy makers will act further to cool property prices. The market was closed for the previous two sessions for the Lunar New Year holiday.

India’s Bombay Stock Exchange Sensitive Index, or Sensex, climbed 0.2 percent. The government said its $1.3 trillion economy will probably expand 8.6 percent in the year ending March 31 from a year earlier. Indonesia’s gross domestic product increased 6.9 percent in the three months through December from a year earlier, a government report today showed. The Jakarta Composite Index fell 0.2 percent, after earlier gaining as much as 0.7 percent.

BUX Rallies

Hungary’s benchmark BUX Index rallied 0.9 percent after Prime Minister Viktor Orban indicated his government may take a more conciliatory stance in its wrangle with the central bank on monetary policy.

Wheat climbed after Egypt, the world’s largest importer of the grain, boosted its budget for purchases and bought 170,000 metric tons of U.S. exports of the grain. Copper climbed to an all-time high of $10,160 a metric ton and brent crude oil jumped 0.5 percent to $100.32 a barrel.