Chinese Stocks, U.S. Index Futures Climb; Yen, Bonds Decline

Chinese Stocks, U.S. Index Futures Climb; Yen, Bonds Decline


Sept. 3 (Bloomberg) -- Stocks in China rose the most in six months, driving the yen and Treasuries lower, on speculation the government will adopt measures to boost equities after the Shanghai Composite Index fell into a bear market.

The Shanghai gauge gained for a third straight day, closing 4.8 percent higher, while the MSCI World Index of 23 developed countries advanced 0.2 percent at 11:40 a.m. in London. Futures on the Standard & Poor’s 500 Index climbed 0.4 percent before a report that may show the pace of contraction in U.S. service industries slowed. The yen weakened against all 16 of the most- traded currencies and the yield on the U.S. 10-year note climbed 3 basis points.

Liu Xinhua, vice chairman of the China Securities Regulatory Commission, said the authorities will promote a “stable and healthy” market, tempering investor concern that the government wants to curb equity and property speculation. Ministers from the Group of 20 nations are likely to suggest the global economy is healing when they meet in London this weekend, while the European Central Bank probably will keep interest rates at a record low today.

“The contribution of China to the global growth recovery story is massive,” said Michael Ganske, head of emerging markets strategy at Commerzbank AG in London. “That’s part of why everybody is so obsessed.”

Asset Bubbles

The Shanghai stock index slumped 22 percent last month as banks reined in lending to avert asset bubbles and policy makers advised industries from steel to cement to curb overcapacity. The measure had rallied 103 percent from a November low on prospects a 4 trillion yuan ($586 billion) stimulus package and record lending would revive growth in the world’s third-largest economy.

Citic Securities Co., China’s largest brokerage, jumped 6.6 percent and Poly Real Estate Group Co. surged 8.2 percent after Liu’s comments, made at a forum in Beijing, were featured on the front pages of the China Securities Journal and the Shanghai Securities News, the nation’s biggest financial newspapers.

China’s stock market has foreshadowed moves in global equities the past two years. It peaked on Oct. 16, 2007, two weeks before the MSCI All-Country World Index. The Shanghai index fell 72 percent from its 2007 high and bottomed on Nov. 4, 2008, four months before the MSCI index.

The gain in U.S. futures indicated the S&P 500 may climb for the first time in five days, halting the longest losing streak since May.

Sun, Oracle

Sun Microsystems Inc. slipped 1.9 percent in pre-market New York trading, while Oracle Corp. retreated 0.5 percent. Oracle faces an extended European Union antitrust probe into its plan to buy Sun for about $7.4 billion after the EU regulator cited “serious doubts” about the market for databases. The commission said it will rule on the transaction by Jan. 19.

The Institute for Supply Management’s index of non- manufacturing businesses, which make up almost 90 percent of the economy, rose to 48, the highest level in 11 months, from 46.4 in July, according to the median forecast in a Bloomberg News survey. Readings below 50 signal contraction.

Data from the Labor Department may show that first-time claims for jobless benefits fell to 565,000 last week from 570,000 the week before, according to economists’ estimates.

The ISM figures are due at 10 a.m. New York time, while the jobless data will be released at 8:30 a.m.

Europe’s Dow Jones Stoxx 600 Index rose 0.3 percent before the ECB meeting.

National Express

National Express Group Plc jumped 12 percent in London after a group led by CVC Capital Partners offered to buy the U.K. travel company, whose rail franchise is being taken over by the government, for 500 pence ($8.19) a share.

Xstrata Plc and Antofagasta Plc advanced more than 1.3 percent after metals rose in London and Alcoa Inc. boosted its forecast for global aluminum consumption. Alcoa added 1 percent in German trading.

Stocks in Greece posted today’s biggest slump among global equity markets after Prime Minister Kostas Karamanlis called early elections, stoking speculation that efforts to revive the economy may be delayed. The benchmark ASE Index lost 3.6 percent.

The MSCI Emerging Markets Index climbed 1 percent, headed for its biggest gain in almost two weeks. The ruble strengthened 0.9 percent against the dollar, the most in three weeks, as oil rallied. Russia is the world’s biggest energy exporter.

Yen Falls

The yen fell 0.2 percent against the dollar and 0.4 percent compared with the euro. The yield on the 10-year Treasury note rose for the first day in five, climbing 4 basis points to 3.34 percent.

U.S. Treasury Secretary Timothy Geithner said yesterday that the G-20 has been “very successful” in helping to end the global recession and cautioned that it’s too early to remove policies aimed at boosting growth. The ECB may raise its economic forecasts today after Germany and France unexpectedly exited recession. Economists don’t expect the central bank to reverse efforts to bolster recovery by pumping cash into the system. The Organization for Economic Cooperation and Development predicted today a “modest” recovery for Group of Seven economies next year.

The first simultaneous recessions in the U.S., Europe and Japan since World War II had sent the MSCI World Index down as much as 59 percent from an October 2007 record through March 9, 2009. The global stocks gauge is still down 37 percent from its all-time high.

Crude oil for October delivery climbed 1.5 percent to $69.04 a barrel on the New York Mercantile Exchange, on expectations a recovering Chinese stock market may signal increased demand from the world’s second-largest oil consumer. OPEC probably will leave production quotas unchanged for a third time when it meets in Vienna next week, according to all 26 analysts surveyed by Bloomberg News.

Copper for three-month delivery on the London Metal Exchange rose 1.2 percent to $6,247 a metric ton while the equivalent contract for lead gained 3.4 percent to $2,187 a ton, its highest intraday price in 13 months.

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