Stocks Extend Biggest 3-Day Gain Since ’09. By Stephen Kirkland and Rita Nazareth -

Stocks surged, extending the biggest three-day rally in global equities since 2009, and the euro strengthened after six central banks acted together to make additional funds available to ease strains from Europe’s debt crisis. Treasuries fell while commodities surged.
The MSCI All-Country World Index climbed 3.1 percent at 10:23 a.m. in New York and is up 7 percent in three sessions. The Standard & Poor’s 500 Index gained 3.2 percent to 1,233.78 as only six stocks retreated. The euro strengthened 1.1 percent to $1.3465. The three-month cross-currency basis swap, the rate banks pay to convert euro payments into dollars, was 133 basis points below the euro interbank offered rate after earlier reaching a three-year high of 163. Oil jumped above $101 a barrel and copper rallied 5.6 percent.


The central banks of the U.S., the euro region, Canada, the U.K., Japan and Switzerland agreed to cut the cost of providing dollar funding via swap arrangements, the Federal Reserve said, and agreed to make other currencies available as needed. China said earlier today it will cut the reserve requirement ratio for banks by 0.5 percentage points from Dec. 5, while data on U.S. business activity and the employment and housing markets topped economists’ estimates.
“I’m in a better mood today than I’ve been in a while,” Burt White, who helps oversee about $315 billion as chief investment officer at LPL Financial Corp. in Boston, said in a telephone interview. “This coordinated effort is a huge one. It is not a European problem, it’s a global problem. If we don’t get Europe solved, it’s going to send pretty big ripples across the globe. We really could see some upside for the market, if this momentum continues.”

Rescue Fund

European finance ministers yesterday agreed to guarantee as much as 30 percent of new bond sales from troubled governments to enhance the region’s bailout fund, and to improve its ability to cap yields by buying bonds. The next 10 days will be a “critical period” to complete the crisis response, European Union Economic and Monetary Affairs Commissioner Olli Rehn said today in Brussels.
Today’s rally trimmed the sixth monthly decline in seven for the S&P 500, leaving the index down less than 2 percent in November. U.S. equities also advanced after companies added 206,000 workers in November, according to data from ADP Employer Services that bolstered optimism in the labor market before a government jobs report in two days. The median forecast of economists surveyed by Bloomberg News called for an increase of 130,000.

Economic Data

Other data showed business activity in the U.S. expanded in November at the fastest pace in seven months, according to the Institute for Supply Management-Chicago Inc., in a sign the factory-led expansion continues. The index of pending home sales increased 10.4 percent in October, the National Association of Realtors said, the biggest gain since November 2010 and five times the median forecast of economists.
Indexes of commodity producers, industrial companies and financial firms jumped at least 3.3 percent to lead gains in all 10 of the main industry groups in the S&P 500. Trading volume of stocks in the index was 56 percent greater than the average at this time of day over the past 10 sessions, according to data compiled by Bloomberg.
Caterpillar Inc., Cisco Systems Inc. and JPMorgan Chase & Co. surged at least 5 percent as all 30 stocks in the Dow Jones Industrial Average climbed.
The S&P GSCI Index of commodities climbed 1.3 percent and is up 4 percent in three days. Copper, aluminum and coffee rose more than 3 percent to lead gains today. Among 24 commodities tracked by the index, only natural gas declined.
More than 21 stocks advanced for every one that declined in the Stoxx 600. Barclays Plc and Deutsche Bank AG rallied more than 5.5 percent. BP Plc, Europe’s second-biggest oil producer, climbed 5 percent and BHP Billiton Plc, the world’s largest mining company, jumped 5.9 percent.

Ratings Cuts

Stocks fell earlier after S&P cut debt ratings on lenders from Bank of America Corp. to Goldman Sachs Group Inc. to UBS AG. More than $3 trillion has been erased from the value of global equities this month as rising borrowing costs in Italy and Spain signaled Europe’s debt crisis was worsening.
The yield on the 10-year Treasury note rose nine basis points to 2.08 percent. Germany’s one-year yield dropped 11 basis points to minus 0.03 percent, sinking below zero for the first time ever.
The MSCI Emerging Markets Index (MXEF) added 2 percent, trimming this month’s drop to 6.7 percent. Benchmark gauges in Brazil, Russia, South Africa and Turkey gained at least 3 percent. Poland’s WIG20 Index jumped 4.1 percent after a report showed the economy grew more than economists forecast in the third quarter. The Shanghai Composite Index (SHCOMP) earlier fell 3.3 percent after central bank adviser Xia Bin said China’s policy “fine- tuning” doesn’t mean credit controls will be loosened.