Stocks, Commodities Gain as China Refrains From Rate Increase

By Nick Baker and Inyoung Hwang

Traders work on the floor of the London Metal Exchange in London. Photographer: Chris Ratcliffe/Bloomberg

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Dec. 13 (Bloomberg) -- Philip Manduca, head of investment at ECU Group Plc, talks about his investment strategy for 2011. He speaks with Andrea Catherwood on Bloomberg Television's "The Pulse." (Source: Bloomberg)

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Dec. 13 (Bloomberg) -- Simon Grose-Hodge, head of investment strategy at LGT Bank Singapore Ltd., discusses the outlook for Chinese stocks and monetary policy. He talks with Francine Lacqua on Bloomberg Television's "On The Move." (Source: Bloomberg)

Stocks rallied, almost completing the Standard & Poor’s 500 Index’s recovery from its post-Lehman Brothers Holdings Inc. losses, and commodities such as copper gained after China refrained from raising interest rates. The U.S. dollar and Treasury 10-year notes dropped.

The S&P 500 rose 0.4 percent to 1,245.82 at 10:58 a.m. New York time. It closed at 1,251.70 on Sept. 12, 2008, the last trading session before Lehman’s collapse spurred a 46 percent drop through March 9, 2009. The MSCI All-Country World Index of shares in 45 nations gained 0.9 percent. Copper rose to a record $9,210 a metric ton in London. Yields on Treasury 10-year notes climbed to a six-month high of 3.39 percent amid speculation Congress will approve President Barack Obama’s tax-cut deal.

While Chinese inflation accelerated to the fastest pace in more than two years, the central bank kept its benchmark interest rate unchanged. The helped boost optimism that the world’s fastest growing major economy will keep fueling the global expansion.

“There’s a sense of relief that there wasn’t further tightening by officials in China,” said Liam Dalton, president of Axiom Capital Management Inc. in New York, which oversees $1.4 billion. “The main event is to sell bonds and to hold onto stocks because the underlying improvement is what the market’s acting upon right now.”

Fed Spending

U.S. government and Federal Reserve spending to stimulate the economy and 70 percent of S&P 500 companies beating profit estimates for a record six straight quarters have helped drive the S&P 500’s rebound since March 2009. The index will end 2011 at 1,379, according to the average projection of 11 strategists at Wall Street’s biggest banks, producing the biggest three-year rally since 1997-2000.

Freeport-McMoRan Copper & Gold Inc. rose 3.4 percent to the highest price since 2008 in the U.S. as metals prices jumped. Apple Inc. rose 1.3 percent after Goldman Sachs Group Inc. said the iPhone maker may rally 34 percent. Dionex Corp. surged 20 percent after Thermo Fisher Scientific Inc. agreed to buy the company for about $2.1 billion.

Among developed nations, benchmark stock indexes for France, Italy and the U.K. posted the biggest gains with advances exceeding 0.8 percent. In emerging markets, China’s main equity gauge jumped 2.9 percent for the biggest increase in two months.

The S&P GSCI Index of commodities advanced 1.6 percent. Oil, corn, hogs, sugar and coffee surged more than 1 percent in U.S. trading. The euro strengthened 1.2 percent to $1.3386, helping drive gains in commodities. The U.S. dollar weakened against 15 of 16 major counterparts.