Asian Stocks Rise on Prospects Bank of Japan May Move to Halt Yen’s Gain

Asian stocks rose, with the regional benchmark headed for its sixth weekly gain, as energy and mining companies rallied and Japanese shares advanced after Prime Minister Yoshihiko Noda pressed the central bank to take “bold” action to stem the yen’s increase.

Woodside Petroleum Ltd. (WPL) paced gains among energy and mining companies as oil and metal prices gained. NEC Corp. slid 7.1 percent after the Japanese maker of personal computers forecast its third loss in four years and said it will cut 10,000 jobs. Li & Fung Ltd., a supplier of toys and clothes to retailers including Wal-Mart Stores Inc., rose 2.9 percent ahead of a report today that economists say will show U.S. economic growth accelerated in the fourth quarter.

The MSCI Asia Pacific Index (TPX) rose 0.3 percent to 122.94 as of 12:30 p.m. in Tokyo. The measure has risen 1.8 percent this week, set for a sixth weekly gain, the longest streak since the period ended Oct. 15.

“Stocks are reacting to Noda’s comments,” said Takeru Ogihara, chief strategist in Tokyo at Mizuho Trust & Banking Co., a unit of Japan’s third-largest lender by market value. “Japanese exporters want the government to make a show of support.”

Japan’s Nikkei 225 Stock Average added 0.4 percent, and South Korea’s Kospi Index rose 0.3 percent. Hong Kong’s Hang Seng Index climbed 0.3 percent. Australia’s S&P/ASX 200 rose 0.9 percent. Stock markets in China, Vietnam and Taiwan are shut today for the Lunar New Year holiday.

U.S. Data, Fed
Futures on the Standard & Poor’s 500 Index fell 0.1 percent today. The gauge lost 0.6 percent in New York yesterday as reports showed that sales of new homes declined in December, claims for U.S. jobless benefits rose last week, and durable goods orders beat estimates last month. The Federal Reserve on Jan. 25 extended its pledge to keep interest rates low and said it is considering additional asset purchases to spur growth.

“The U.S. housing and employment data looks weak, and it isn’t a problem that will be easily solved,” said Seiichiro Iwamoto, who helps oversee about $35 billion at Mizuho Asset Management Co. in Tokyo. “The whole world is moving toward monetary easing. Europe and the U.S. are injecting a lot of liquidity, and that’s boosting commodities.”

A report today will show U.S. gross domestic product, the value of all goods and services produced, rose at a 3 percent annual rate in the fourth quarter after advancing 1.8 percent in the previous quarter, according to the median forecast of economists surveyed by Bloomberg News.

Energy and mining shares rose as crude oil for March delivery was at $99.85 a barrel, up 15 cents, in electronic trading on the New York Mercantile Exchange. The London Metal Exchange Index of prices for six industrial metals including copper and aluminum rose 2.4 percent yesterday.

Woodside, Inpex
Woodside Petroleum, an Australian oil and gas producer, added 2.3 percent to A$34.76. Inpex Corp. (1662), Japan’s No. 1 energy explorer, advanced 2.9 percent to 528,000 yen, while smaller Japan Petroleum Exploration Co. climbed 1.3 percent to 3,420 yen. BHP Billiton Ltd. (BHP), the world’s No. 1 mining company, rose 1.3 percent to A$37.88.

The MSCI Asia Pacific Index (TPX) gained 7.7 percent this year through yesterday, compared with increases of 4.8 percent by the S&P 500 and 5.4 percent by the Stoxx Europe 600 Index. Stocks in the Asian benchmark are valued at 1.3 times book value. That compares with 2.1 times for the Standard & Poor’s 500 Index in the U.S. and 1.4 times for the Europe Stoxx 600 Index in Europe.

NEC slumped 7.1 percent to 156 yen after the maker of mobile phones, computers and wireless gear yesterday forecast a 100 billion-yen loss for the year ending March 31, abandoning a previous outlook for a 15 billion-yen profit. It will also take a charge of 40 billion yen for the job cuts, the Tokyo-based firm said.

Asian Stocks Advance for Second Day as Fed Considers More Asset Purchases

Asian stocks rose for a second day after the Federal Reserve extended its pledge to keep interest rates low and Chairman Ben S. Bernanke said the central bank is considering more asset purchases to boost economic growth.

Li & Fung Ltd., a supplier of toys and clothes to Wal-Mart Stores Inc., advanced 3.5 percent in Hong Kong. Cnooc Ltd., China’s largest offshore energy explorer, paced gains among energy firms after oil and metal prices climbed. Tokyo Electric (9501) Power Co. rose 7.4 percent after a report that the company will accept public funds to stay afloat.

The MSCI Asia Pacific Index (TPX) gained 0.7 percent to 122.16 as of 1:38 p.m. in Tokyo with all 10 industry groups on the measure advancing. The gauge gained 0.5 percent over the past three days, while Hong Kong’s market was closed for the Lunar New Year holiday.

The Fed’s statement “is in favor of stock markets,” said Ayako Sera, a market strategist in Tokyo at Sumitomo Trust & Banking Co., which manages the equivalent of $321 billion. “The Fed is clearly saying it will print more money and do more policy easing.”

Japan’s Nikkei 225 Stock Average fell 0.4 percent, while South Korea’s Kospi Index added 0.2 percent. New Zealand’s NZX 50 Index gained 0.1 percent in Wellington after central bank Governor Alan Bollard signaled he may keep interest rates at a record low for longer than expected with inflation being contained.

Hong Kong’s Hang Seng Index advanced 1.2 percent. Trading volume of stocks in the measure was 9.4 percent above the average over the past 10 days after the market reopened following a three-day holiday break, according to data compiled by Bloomberg. Stock markets in China, Taiwan, Vietnam, Australia and India are closed today for public holidays.

‘Monetary Accommodation’
Futures on the Standard & Poor’s 500 Index fell less than 0.1 percent today. The gauge rose 0.9 percent in New York yesterday after the Fed extended its pledge to keep interest rates low through at least late 2014.

Policy makers are “prepared to provide further monetary accommodation if employment is not making sufficient progress towards our assessment of its maximum level, or if inflation shows signs of moving further below its mandate-consistent rate,” Bernanke said yesterday after a Federal Open Market Committee meeting in Washington. Bond buying is “an option that’s certainly on the table.”

Exporters to the U.S. advanced. Li & Fung gained 3.5 percent to HK$17.80. Techtronic Industries Co. (669), a maker of Ryobi power tools and Hoover vacuum cleaners that counts North America as its largest market, added 2.6 percent to HK$9.16.

‘Underwriting Recovery’
“Bernanke is presenting the world with a gift,”Khiem Do, Hong Kong-based head of multi-asset strategy at Baring Asset Management Ltd., said in a Bloomberg Television interview. The firm oversees $46 billion. “He wants to underwrite the recovery and underwriting the recovery is very good for equity markets and risk assets.”

The MSCI Asia Pacific Index (TPX) gained 6.6 percent this year through yesterday, compared with increases of 5.4 percent by the S&P 500 and 4.3 percent by the Stoxx Europe 600 Index. Stocks in the Asian benchmark are valued at 1.3 times book value. That compares with 2.2 times for the Standard & Poor’s 500 Index in the U.S. and 1.4 times for the Europe Stoxx 600 Index in Europe.

Energy firms gained the most among the 10 industry groups on the Asia-Pacific gauge as crude oil for March delivery rose as much as 66 cents to $100.06 a barrel on the New York Mercantile Exchange. The London Metal Exchange Index of prices for six industrial metals including copper and aluminum climbed 0.7 percent yesterday for a third day.

Energy Firms Rise
Cnooc Ltd. (883), China’s largest offshore energy explorer, rose 2.1 percent to HK$15.82. China Coal Energy Co. advanced 2.6 percent to HK$10.16, while Yanzhou Coal Mining Co. added 2.5 percent to HK$19.36. Zhaojin Mining Industry Co. gained 7.3 percent to HK$13.54.

Tokyo Electric rose 7.4 percent to 217 yen after the Yomiuri newspaper reported today the utility will accept a 1 trillion yen ($12.9 billion) infusion of public funds to help it survive after the Fukushima nuclear disaster in the wake of Japan’s earthquake and tsunami last year. The Tokyo-based company is relying on public money, as the government estimates Tepco faces 4.5 trillion yen in compensation claims by March next year.

The radiation release from reactor meltdowns after the catastrophe forced 160,000 people to flee their homes and damaged farming, forestry and fisheries businesses.

-with assistance from Rishaad Salamat and Lynn Thomasson in Hong Kong. Editors: John McCluskey, Jason Clenfield

Baltic Dry Index plunge signals a major drop in economic activity

**LiangChai: What happen if BDI index below 1000 then now at 862????
Those stock related with BDI index....
MAYBULK 
COASTAL
ALAM
SYSCORP
HUBLINE
TAS
TGOFFS
SEALINK




3 days news
Index loses 53 per cent in three years. It is a measure of maritime shipping costs for commodities like minerals and grains (with the Pacific Ocean as the hub). The recent decline reflects trends in industrial output in Asia, especially China.

Milan (AsiaNews) – The Baltic Dry Index (BDI) hit a new low at 1.013 points (pts), dropping by 40 pts (-3.80 per cent) from the previous closing. This represents a drop of 47.51 per cent in 35 days compared to the 12 December session, when it closed at 1,930 pts. In the past 52 weeks, it slid by 53.38 per cent from a high of 2,173 pts (set on 14 October 2011). Yesterday’s level represents the lowest in the past three years and is a sign of a steep and sudden decline. This is important because it is an indicator of deep cuts in basic economic activity in Asian nations on the Pacific Ocean, most notably China.

The index had also taken a nosedive in 2008, but one that was even steeper than the current one. On 20 May 2008, the BDI had hit 11,793 pts, its highest level since it was first introduced in 1985. Only six months later, on 5 December, it hit its lowest point (in the middle of the post-Lehman Brothers crisis), at 663 pts for an overall decline of 94 per cent.

In order to understand the importance of these numbers, we must first consider the term itself. The Baltic Dry Index has nothing to do with today’s Baltic Sea, because the bulk of today’s maritime trade takes place in the Pacific, but it did 270 years ago, in 1744 to be more precise.

The BDI is a measure of costs for commodities shipped in bulk dry cargo carriers. In practice, it refers to shipping costs for goods, especially mining products (mostly coal and iron) and grains (wheat, soya, maize and other cereals), transported in bulk quantities in big cargo ships (from 30,000 to over 100,000 tonnes per ship).

The BDI is equally important from a macroeconomic point of view. It is a good indicator of trade in raw materials and agricultural commodities. For instance, shipments of minerals are an indication of basic industrial trends. A drop in iron ore shipments reflects a lower demand for steel in construction and heavy industry. A drop in agricultural commodities indicates lower output since relative demand for food staples tends to be stable, albeit on a slightly upward curve. More recently however, the relation between agricultural production and demand (tied to consumption and economic cycle) has been less significant because a substantial portion of grain production has gone into non-food use, like biofuels.

Since bulk dry cargo ships carry commodities used in semifinished products and industrial goods like cement and (coal-generated) power, the BDI is a forecasting tool of future economic activity.

Presently, because most primary industrial production is centred in Asia, especially China, so most bulk dry cargo shipping criss-crosses the Pacific. Thus, the current low BDI indicates a major and sudden drop in industrial production in Asia, chiefly in China, down to one of its lowest point, about a tenth of what it was in 2008.

Birinyi Sees Bull Market Continuing in 2012

Laszlo Birinyi, whose prediction the bull market would weather a five-month retreat came true in October when the Standard & Poor’s 500 Index rallied 11 percent, says stocks will keep climbing in 2012.

Equities will gain at least 8 percent as improving corporate profits force bears to capitulate, according to Birinyi, who manages $400 million in Westport, Connecticut. Forecasts for declines from economists Gary Shilling and Nouriel Roubini were repudiated in 2011 as the benchmark gauge for American equities erased a 13 percent drop.

Birinyi, who advised holding stocks in August as the U.S. government was stripped of its AAA credit rating and strategists cut forecasts faster than any time since the credit crisis, said shares will climb for years to come if history is any guide. Shilling, president of A. Gary Shilling & Co., predicts equity investors will lose money in 2012 as consumer spending drops.

“Many concerns are opinions, but not necessarily facts,” Birinyi, president of Birinyi Associates Inc., said in a telephone interview on Jan. 4. “Later in the year, things will get a little bit better and sentiment will change, and we end up at the last leg where we’ve got the last-guy-in-the-pool scenario.”

Annual 28% Returns
The S&P 500 has risen 89 percent since March 2009, returning 28 percent a year to investors including dividends as U.S. gross domestic product expanded at an average rate of 2.4 percent over nine quarters. After ending 2011 virtually unchanged, the index gained 1.6 percent to 1,277.81 last week, the biggest rally to start a year since 2006. Futures on the S&P 500 advanced 0.8 percent at 10:07 a.m. in London today.

While U.S. stocks avoided a bear market in 2011, they posted their biggest decline since 2008, falling 19.4 percent between April and October. Investors outside the U.S. suffered bigger losses, with the Stoxx Europe 600 plunging 26 percent and China’s Shanghai Stock Exchange Composite Index tumbling about 30 percent. About $6 trillion was erased from global equity values last year, the second annual decline since 2002.

The Chicago Board Options Exchange Volatility Index, a gauge of investor concern derived from equity derivatives, averaged 24.2 in 2011, the third-highest level in the last nine years behind 2008 and 2009, data compiled by Bloomberg show. It reached a 29-month high of 48 on Aug. 8. The Dow Jones Industrial Average swung 400 points for four straight days for the first time ever in August.

Strategists Cut
The average S&P 500 estimate from 13 Wall Street strategists tracked by Bloomberg fell more than 9 percent from May through November, the most since 2009. Their forecast for a 6.4 percent increase in 2012 at the start of this year was the most conservative since 2005, Bloomberg data show.

“Even though we were basically flat, this was a really volatile year,” Peter Sorrentino, a senior fund manager at Huntington Asset Advisors in Cincinnati, who helps oversee $14.5 billion, said in a Jan. 5 phone interview. “Negative sentiment is what trapped the U.S. market and then we got range bound because the fear that if Europe slips into a major recession, it takes us with them.”

Birinyi, an equity trader at Salomon Brothers Inc. in the 1980s, was one of the first investors to recommend buying when stocks bottomed in 2009. He stayed bullish through the S&P 500’s decline of 16 percent in 2010 and last year’s tumble to 1,099.23 on Oct. 3 from 1,363.61 on April 29.

‘We Were Uncomfortable’
“Quite frankly, when the market got down 19 percent, we were uncomfortable,” he said in a Jan. 4 phone interview. “But we were uncomfortable in 2010 when the market went down 15 percent, and it ended up recovering.”

U.S. equities (SPX) are in the third of four bull market stages, in which investors accept the rally that gathered momentum in the first two, according to Birinyi’s analysis. He said this phase, which started around July, should end in 2012 with a gain of at least 8 percent. The bull market’s final phase of “exuberance” has lifted the S&P 500 an average of 39 percent in the five advances since 1962, he said.

S&P 500 earnings have beaten estimates for the past 11 quarters and are forecast to climb above $100 a share in 2012, according to analyst projections compiled by Bloomberg. A ratio of debt to assets for S&P 500 companies reached its lowest point since at least 2002 in the third quarter, Bloomberg data show.

Bulls Under Pressure
Bulls such as Birinyi came under pressure in the second half of 2011 as the S&P 500 tumbled 5.7 percent in August and 7.2 percent in September. It lost 4.5 percent on Aug. 18 when the Federal Reserve said factory production in the Philadelphia region reached a 29-month low. The index lost more than 5 percent over two days twice before bottoming on Oct. 3, the first time after the Fed cited risks to the economy on Sept. 21, the second after consumer spending slowed on Sept. 30.

Stock swings increased as economists cut their forecast for 2012 GDP growth from 3.3 percent in February to 2 percent in October. Roubini, the co-founder and chairman of Roubini Global Economics LLC in New York, put chances of a contraction in developed economies at 60 percent and said investment gains would prove temporary. The S&P 500 is up 4.5 percent since he spoke Oct. 18 at an Asset Allocation Summit in London. Roubini declined to comment on his outlook.

Shilling said in September that equities were likely to drop and that earnings would fall short of estimates. He predicted in August that the U.S. would enter a recession this year. While he missed the 17 percent rally that began Oct. 3, he’s betting on a retreat as consumers save, the economy shrinks and profits fall.

‘Tough-Going’
“It’s probably tough-going for the equity markets this year because the expectations are that economy is going to be strong and corporate profits are going up,” Shilling, who contributes to Bloomberg View, said in a Jan. 4 phone interview. “I don’t think that’s realistic. I think we’ll probably have a decline in earnings, which feeds off the forecast of a moderate recession.”

Michael Shaoul told clients of Marketfield Asset Management on Sept. 14 and Sept. 23 to hold stocks because the decline wouldn’t last. While investors were right to be wary of Europe’s debt crisis, calls for a U.S. recession were unwarranted, according to Shaoul, who helps oversee $1 billion in New York.

‘Violent Market’
“This was a particularly violent market,” Shaoul said in a Jan. 5 phone interview. “At some point in time those negative things are going to matter a great deal, but not at this point in the cycle. It still looks to me that the U.S. equity market should be able to surpass that 2011 high.”

The S&P 500 has risen about 7.1 percent during the third year of a bull market and the price-earnings ratio increases 6.3 percent, according to Bloomberg data dating back to 1960. The index is trading at 13.5 times reported earnings, compared with 15.8 in February and about 18 percent below the 16.4 average since 1954, data compiled by Bloomberg show.

Alcoa Inc. was the first Dow company to report earnings for the last three months of 2011 yesterday when the largest U.S. aluminum producer posted its first quarterly loss in more than two years. Fastenal Co. and eBay Inc. are among the companies scheduled to report in the next 10 days that analysts forecast will see an increase in earnings, according to estimates compiled by Bloomberg.

“What we can see is that companies are still in business, balance sheets are good, earnings are still there and the negative case continues to be somewhat sketchy,” Birinyi said. “The potential for surprise does exist.”

Prediction: Stocks and Gas to Rally in 2012

Rallies in stocks and gasoline will push prices toward the highest levels ever in 2012 even as U.S. Treasury yields hold near record lows.

So say Douglass Kass of Seabreeze Partners Management Inc., Citigroup Inc.’s Edward L. Morse and Christopher Low of FTN Financial, forecasters whose predictions for equities, energy and bonds proved prescient in 2011. Repeating the feat with their calls for 2012 would require an unprecedented breakdown in price relationships across markets after correlations reached the tightest levels ever.

“They can’t all be right,” Chad Morganlander, a Florham Park, New Jersey-based money manager at Stifel Nicolaus & Co., which oversees more than $107 billion in client assets, said in a telephone interview on Jan. 5. “Strategists provide a valuable role in the financial community, but flexibility of institutional and individual investors is paramount.”

The diverging views follow a year of near-record volatility in which just two of 12 Wall Street forecasters tracked by Bloomberg came within 60 points of the S&P 500’s close and FTN’s Low was the only economist out of 72 to predict the 10-year yield would slip to 2 percent. Hedge fund managers posted their second-worst return on record and investors pulled money from mutual funds that buy U.S. stocks for a fifth straight year.

Lockstep Moves
Taken together, the outcomes foreseen by Kass and Low would mean a reversal in lockstep moves between the S&P 500 and 10- year yields that have never been greater. Their 30-day correlation coefficient averaged 0.62 in 2011, the highest annual level in Bloomberg data going back to 1962. A coefficient of 1 means assets are moving in unison.

The S&P 500 as of last week had gained 1.6 percent this year to 1,277.81 after reports on hiring, manufacturing and construction spending exceeded economist forecasts, spurring speculation that growth is accelerating in the U.S. Today, futures on the S&P 500 expiring in March rose less than 0.1 percent. The average price for a gallon of gasoline has risen 2.9 percent this year to $3.374, according to the American Automobile Association, while 10-year Treasury yields (USGG10YR) have climbed to 1.97 percent from 1.88 percent.

Kass said in December 2010 that the S&P 500 would end 2011 at 1,257. The benchmark gauge for U.S. equities lost 0.04 point to 1,257.60 last year, the smallest annual change since 1947. Now, he says the index will surpass its March 2000 level of 1,527.46, a 21 percent rally from the end of 2011.

‘Near-Fatal Affliction’
“Europe will morph from a near-fatal affliction to a condition that can be tolerated,” Kass said in a telephone interview on Jan. 4. “The U.S. economy is going to surprise to the upside,” he said. “Stocks are very, very cheap and I haven’t felt like this in a long time.”

Low took the opposite view of Kass on Europe in projecting the yield on benchmark 10-year U.S. notes will hold at 2 percent. The rate peaked at 3.77 percent last year before finishing within a quarter-percentage point of a record low at 1.88 percent, according to Bloomberg Bond Trader prices.

“There still hasn’t been a permanent solution for Europe, there is still lots of uncertainty about the direction of fiscal policy,” Low said in a telephone interview on Jan. 4. “As far as the economic picture goes, so many sectors aren’t contributing.”

Morse, New York-based head of commodities research at Citigroup Global Markets Inc., says gasoline will climb 19 percent to a $4 a gallon because of the closure of refineries in the Northeast U.S. Crude oil this year may head the opposite direction as the dollar strengthens, he said in a Jan. 5 telephone interview.

Dollar Appreciation
“We expect at Citi to see continued dollar appreciation against the euro -- if not all of 2012, the first half of it, which should have a drag on commodity prices to the degree that other factors like the closure of the Strait of Hormuz won’t stand in the way,” Morse said, referring to the oil tanker shipping route Iran has threatened to close.

Morse predicted in 2011 that Europe’s benchmark Brent crude price would reach a record over its U.S. counterpart. The premium compared with West Texas Intermediate oil grew to the widest level ever $27.88 on Oct. 14.

The S&P 500 ended 2011 about 8.3 percent below the 1,371 average strategist estimate from 12 months earlier, data compiled by Bloomberg show. The gap compares with a 13-year average of 7.2 percent and is the biggest miss since 2008, when the index’s 38 percent retreat left it 45 percent below the mean projection.

‘Hard Enough’
“Getting the direction right is hard enough, then getting the absolute level correct is more difficult, particularly if your underlying assumption around volatility changes,” Barry Knapp, the New York-based head of U.S. equity strategy at Barclays Plc, said in a telephone interview on Jan. 5.

Knapp raised his forecast for where the S&P 500 would end 2011 to 1,450 from 1,425 in February before taking that forecast to 1,325 in September and 1,260 in October. The strategist said in June investors should expect a range between 1,250 to 1,350 on the benchmark index until the end of the year.

War, revolution and natural disasters usually can’t be anticipated and require reassessment of the market, Morse said.

“The beginning of the Libyan disruption took place before I left Credit Suisse on Feb. 22, and among the last things I did was revise an oil outlook based on an assumption that this disruption was going to last at least six months,” he said.

Strategists and investors struggled last year to anticipate market moves amid Europe’s sovereign-debt crisis, concerns over the U.S. economic rebound, uprisings in the Middle East and Japan’s March 11 earthquake undermined traditional forecasts.

Dan North, chief U.S. economist at Euler Hermes ACI in Owings Mills, Maryland, predicted the benchmark 10-year Treasury note would rise to 5.5 percent at the start of last year. The estimate was the furthest off in a survey on 51 economists surveyed by Bloomberg.

“There was a lot to deal with,” North said. “Last year, the things that economists would academically call exogenous events -- one-time, outside-of-the-economic-sphere things -- happened again and again and again.”

European Stocks Decline as Carmakers, Mining Companies Drop

European stocks declined, erasing their earlier gains, as shares of carmakers and commodity companies dropped.

The Stoxx Europe 600 Index lost 0.3 percent to 241.26 at 2:55 p.m. in London, after earlier advancing as much as 0.6 percent. The gauge rallied 2 percent in the previous three sessions as investors turned attention from the debt crisis to U.S. data that showed the recovery in the world’s largest economy is gathering pace.

The European (SXXP) Central Bank’s balance sheet soared to a record after it lent financial institutions more money last week in an attempt to keep credit flowing to the economy during the debt crisis.

Lending to euro-area banks jumped 214 billion euros ($280 billion) to 879 billion euros in the week ended Dec. 23, the Frankfurt-based ECB said in a statement today. Its balance sheet increased 239 billion euros to 2.73 trillion euros, it said.

Italy today sold 9 billion euros ($11.8 billion) of six- month Treasury bills at half the yield it agreed to pay at an auction of the securities last month. The Rome-based Treasury sold the 179-day bills at a rate of 3.251 percent, down from 6.504 percent on Nov. 25. Demand was 1.7 times the amount on offer, compared with 1.47 times last month.

Italy also sold 1.733 billion euros of 2013 notes today to yield 4.853 percent, compared with a yield of 7.814 percent at the last auction on Nov. 25. The bid-to-cover ratio was 2.24, compared with 1.59 last month. Tomorrow Italy will auction four different securities, including a 10-year bond.

Lower Risks
“The odds to have a real problem in Italy in 2012 are much lower today than what they were three or four months ago,” said Jean-Paul Jeckelmann, chief investment officer at Banque Bonhote & Cie. in Neuchatel, Switzerland, who helps manage $1.4 billion in equities. “While today sets a hopeful basis, the real test is what happens with the long-term financing, which is much more difficult for investors and banks to carry in their books.”

Britain faces the “toughest” job market in two decades with the number of working people likely to fall by 120,000 in 2012, the Chartered Institute of Personnel and Development said.

“The U.K. jobs market will be weaker than at any time since the recession of the early 1990s,” John Philpott, chief economic adviser at the CIPD, an association for human-resource professionals, said in a statement. “The combination of worsening job shortages for people without work, mounting job insecurity and a further fall in real earnings for those in work may test the resilience and resolve of the U.K. workforce far more than it did in the recession of 2008-9.”

Greece will hold national elections at the end of April, state-run Athens News Agency reported, citing Finance Minister Evangelos Venizelos. The new poll date provides the government of Prime Minister Lucas Papademos more time to complete a new financing agreement and a debt swap, the newswire reported.

U.S. Stocks Rise as Housing Data Beat Estimates

U.S. stocks climbed, giving the Standard & Poor’s 500 Index its biggest gain of the month, as better-than-estimated housing starts added to expectations the world’s largest economy will weather Europe’s debt crisis.

Homebuilders PulteGroup Inc. (PHM) and Lennar Corp. (LEN) rose more than 6.3 percent. Caterpillar Inc. (CAT), Chevron Corp. (CVX) and Bank of America Corp. (BAC) rallied at least 3.7 percent, pacing gains among the biggest companies. Jefferies Group Inc. (JEF) surged 23 percent as the investment bank reported profit that beat estimates. Sprint Nextel (S) Corp. jumped 9.3 percent and Juniper Networks Inc. (JNPR) added 8.9 percent as AT&T Inc. pulled its bid for T-Mobile USA.

The S&P 500 rose 3 percent to 1,241.30 at 4 p.m. New York time, as 492 out of 500 stocks gained. The gauge lost 1.2 percent yesterday. The Dow Jones Industrial Average added 337.32 points, or 2.9 percent, to 12,103.58 today. The Russell 2000 Index of small companies rallied 4.2 percent to 738.22.

“The housing report is one more brick in the wall and an important indication of economic strengthening,” Mark Luschini, chief investment strategist at Philadelphia-based Janney Montgomery Scott LLC, which manages $54 billion, said in a telephone interview. “Things are improving and that’s helping to buttress better the impact of Europe’s crisis.”

Stocks gained (SPX) as builders broke ground in November on more houses than at any time in the past 19 months. Concern about Europe’s debt crisis eased today as German business confidence unexpectedly grew and Spain sold 5.64 billion euros ($7.36 billion) of bills, more than the maximum target.

Average Since 1954
Today’s rally trimmed this year’s drop in the S&P 500 to 1.3 percent. The benchmark measure had tumbled 12 percent from a three-year high in April through yesterday as Europe struggled to tame its debt crisis. It’s trading for 13.1 times reported earnings, compared with the average since 1954 of 16.4 times, according to data compiled by Bloomberg.

“You’re getting a discount to buy equities,” said Michael Strauss, who helps oversee about $27 billion of assets as the chief investment strategist at Commonfund in Wilton, Connecticut. He spoke in a telephone interview. “I’m hoping we get some separation of the U.S. economic events from some of the European events. Stocks are very reasonably priced.”

The Morgan Stanley (MS) Cyclical Index of companies which tend to benefit the most from economic growth added 3.8 percent. A measure of homebuilders in S&P indexes jumped 6.4 percent as 11 of its 12 stocks gained. PulteGroup climbed 10 percent to $6.17 for the biggest increase in the S&P 500. Lennar advanced 6.3 percent to $19.68. Caterpillar rose 5.1 percent to $91.73. Chevron rose 4 percent to $103.67.

Banks Rebound
The KBW Bank Index (BKX) of 24 stocks climbed 4.1 percent. Bank of America, which yesterday ended at the lowest level since March 2009, gained 3.7 percent to $5.17. JPMorgan Chase & Co. (JPM) added 4.9 percent to $32.21.

Jefferies rallied 23 percent, the most since 2008, to $14.50. The investment bank that’s been fighting speculation about its financial strength rose after fiscal fourth-quarter profit beat estimates on a recovery in fixed-income trading. Jefferies may not have to raise more equity after reducing assets on its balance sheet, Sean Egan of Egan-Jones Ratings Co. said today on CNBC.

Phone shares rose as AT&T (T)’s $39 billion bid to acquire Deutsche Telekom AG’s T-Mobile USA came to an end yesterday. AT&T failed to convince the Justice Department, which sued to block the transaction in August, that it could remedy the market impact of absorbing T-Mobile. AT&T added 1.3 percent to $29.12.

Sprint, Juniper
Sprint Nextel jumped 9.3 percent to $2.36. Verizon Communications Inc. (VZ) gained 1.5 percent to $39.21. Juniper Networks, a maker of networking equipment, surged 8.9 percent to $19.74. Dish Network Corp. (DISH) soared 9.2 percent to $27.46 after Stifel Nicolaus & Co. said AT&T may seek to acquire the second- largest U.S. satellite-TV company to gain wireless spectrum.

Apple Inc. (AAPL) rallied 3.6 percent to $395.95. The Cupertino, California-based company won a patent-infringement ruling that bans some HTC Corp. smartphones from the U.S. starting next year, bolstering efforts to prove that devices running Google Inc.’s Android operating system copy the iPhone.

Oracle Corp. (ORCL) tumbled 10 percent to $26.19 at 5:23 p.m. New York time. The second-largest software maker reported quarterly sales and profit that missed analysts’ estimates as customers held off on purchasing database and applications software. The shares rose 1.9 percent to $29.17 in regular trading.

CVS Caremark Corp. rose 8.9 percent to $39.80. The largest U.S. distributor of prescription drugs boosted (CVS) its quarterly dividend to 16.25 cents a share from 12.5 cents a share.

Red Hat
Red Hat Inc. (RHT) tumbled 8.9 percent, the biggest decline in the S&P 500, to $41.95. The largest seller of the open-source Linux operating system reported third-quarter billings and deferred revenue that missed some analysts’ estimates.

Today’s equity rally brought the S&P 500 above its average price of the past 50 days. Still, the index needs to rise above its 200-day average, a level where the gauge has stalled three times since October, to sustain its rally, Janney Montgomery Scott LLC said.

“A closing breakout above 1,260 is what the markets need,” Dan Wantrobski, the Philadelphia-based director of technical research at Janney, wrote in a report today. “A convincing breakout above this threshold would be bullish for U.S. equities overall.”

The S&P 500’s advance from its 2011 low on Oct. 3 faltered after the gauge closed above the 200-day threshold on Oct. 27, Oct 28 and Nov. 8. The index also traded above the level on an intraday basis for three days starting Dec. 5, only to retreat amid concern that European leaders may not be able to contain the region’s credit crisis.

Mohd Nazifuddin resigns from Harvest Court board

KUALA LUMPUR (Nov 21): HARVEST COURT INDUSTRIES BHD [] said Mohd Nazifuddin Najib has resigned as an independent director, 25 days after he was appointed.

The company said on Monday that his resignation took effect on the same day. He was appointed to the board on Oct 28.

He still owns 3.98 million Harvest Court shares.

Nazifuddin is the chairman of 1Green Enviro Sdn Bhd, Magna Healthcare Sdn Bhd, Cahaya Pedoman Sdn Bhd, Tribus Sdn Bhd and Sagajuta (Sabah) Sdn Bhd. He also the director of Kingtime International Ltd and Dynac Sdn Bhd.

RHB Research underweight on property sector

KUALA LUMPUR (Nov 21): RHB Research Institute said the property sector’s fundamentals remain weak.

It said on Monday, the prolonged sovereign debt crisis in the EU countries has overshadowed the global economic outlook next year.

“Therefore, property sales are likely to taper off (after a 21% growth in 2010) with a growth of 0%-5% in 2012, given that it is highly driven by GDP growth,” it said.

RHB Research said from its recent conversation with developers, potential buyers are indeed taking longer time in their property buying decisions than previously, especially on premium PROPERTIES []. Mass housing will continue to fare better due to pent-up demand.

“Although we have recently upgraded UEM Land to Trading Buy and Mah Sing to Market Perform, we maintain our Underweight stance on the sector. Our stock pick is selective.

“Over the short-term, we foresee UEM Land to benefit from more O&G-related news flow in Iskandar, while IJM Land’s share price could be supported by potential M&A angle following the recent offer made by PNB to SP Setia,” it said.

RHB Research said as expected, further regulations were imposed on household financing that will have an impact on the property sector.

“In our view, the guidelines issued by BNM do not come with reinforcement. This means the banks will still have flexible options in their credibility assessment,” it said.

The research house said that based on its checks, some banks are already assessing potential borrower’s net salary in their evaluation process.

RHB Research said having said, the banks are likely to tighten their lending on home mortgages gradually going forward, as signaled by BNM.

“While the immediate impact will not be seen until 1H2012, we believe the high-end segment will be more sensitive to regulatory tightening as financing availability gets narrower. Based on our sector report dated Sept 5, 2011, the stricter lending rules are likely to result in 11%-37% decrease in affordability,” it said.

U.S. Stocks Decline on Concern Supercommittee Won’t Agree on Budget Cuts

U.S. stocks slumped, giving the Standard & Poor’s 500 Index its longest losing streak since September, after lawmakers failed to agree on budget cuts and Moody’s Investors Service warned of France’s fiscal challenges.

Bank of America Corp. (BAC) and Citigroup Inc. (C) slid at least 3.2 percent following losses in European lenders. Alcoa Inc. (AA) and Halliburton Co. (HAL) declined more than 1.5 percent as commodities sank. Walgreen Co. (WAG), the largest U.S. drugstore chain, lost 2.7 percent as Morgan Stanley cut its rating. Gilead Sciences Inc. (GILD) tumbled 10 percent after agreeing to buy Pharmasset Inc. (VRUS) for about $11 billion in cash. Pharmasset soared 85 percent.

The S&P 500 dropped 2 percent to 1,191.02 at 10:20 a.m. New York time. The benchmark gauge has lost 5.3 percent in four days. The Dow Jones Industrial Average declined 238.63 points, or 2 percent, to 11,557.53 today after a Democratic aide said the supercommittee that was supposed to dissolve congressional gridlock in Washington is instead on the brink of failure.

“You’re looking at a potential double whammy,” Barry Knapp, the New York-based head of U.S. equity strategy at Barclays Plc, said in a telephone interview. “The bigger problem is that a deal in the supercommittee was expected to pave the way to extend the stimulus that is in the system. If you don’t get a deal, which is probable, you get a big hit to the economy in the first quarter right at the point when the economic fallout from the European debt crisis is hitting.”

Trading Range
The decline pushed the S&P 500 below levels representing the top of a price range that prevailed in the two months after the U.S. was stripped of its AAA credit rating by S&P on Aug. 5. Rallies after the downgrade brought the S&P 500 to closing highs of 1,204.49 on Aug. 15, 1,218.89 on Aug. 31 and 1,216.01 on Sept. 16, according to data compiled by Bloomberg.

Today is the deadline for the Congressional Budget Office to receive information for scoring a proposal in advance of the supercommittee’s Nov. 23 target date for reaching a deal. The 12-member bipartisan supercommittee likely will announce today that it can’t reach agreement on deficit savings, according to a Democratic aide.

“Failure to reach agreement on at least the minimum required savings will reflect poorly on Congress,” David Kostin, a strategist at New York-based Goldman Sachs Group Inc., wrote in a report to clients dated Nov. 18. “It would showcase the inability of elected officials to act in the long-term best interests of all Americans.” Kostin said that may drive the S&P 500 down to 1,100.

‘Noticeably Slower’
France’s rising financing costs are increasing the nation’s fiscal challenges, according to report issued by Moody’s. Germany’s Finance Ministry said the country’s expansion is “noticeably slower” this quarter.

“The global selloff in risk assets reflects concerns about the inability of policy makers to catch up with unsettling economic and financial realities, particularly in Europe and America,” Mohamed A. El-Erian, the chief executive officer at Pacific Investment Management Co. in Newport Beach, California, said in an e-mail. “The selloff is amplified by growing strains in the underlying functioning of markets.”

Equities slumped last week as higher government bond yields in Spain, France and Italy spurred concern the European debt crisis is intensifying outside Greece. Financial stocks in the S&P 500 slumped 5.6 percent last week, the biggest drop among 10 industries, after Fitch Ratings said further contagion from Europe’s debt turmoil would be a risk for U.S. banks.

Financial stocks in the S&P 500 fell today as a gauge of European lenders dropped 2.9 percent. Bank of America declined 3.5 percent to $5.58. Citigroup decreased 5.3 percent to $24.89.

Commodity Shares
Energy and raw-material producers sank as the dollar rose, reducing the appeal of commodities as alternative investments. Alcoa retreated 3.3 percent to $9.37. Halliburton erased 4.2 percent to $34.45.

Walgreen dropped 2.7 percent to $31.74 after being cut to “underweight” at Morgan Stanley, which cited significant earnings uncertainty.

Pharmasset soared 85 percent to $134.32. Gilead Sciences, the world’s largest maker of HIV medicines, agreed to buy Pharmasset, betting that its experimental hepatitis C treatments will lead the next generation of therapies in a market that may reach $20 billion by 2020. Gilead Sciences slid 10 percent to $35.77.

A gauge of homebuilders in S&P indexes sank 2.6 percent even after a report showed that sales of previously owned homes in the U.S. unexpectedly rose in October.

RIM, Barton Biggs

Research In Motion Ltd. (RIM) fell 6.4 percent to $17.03 after analysts at RBC Capital Markets and JMP Securities LLC cut their profit estimates, citing increased competition, and the smartphone maker said some customers couldn’t turn on their BlackBerry Bold devices.

Barton Biggs, the hedge fund manager who reduced U.S. equity investments in September before the biggest monthly rally since 1991, cut bullish bets again on concern the odds of a U.S. recession have increased.

The Traxis Global Equity Macro Fund’s net long position has been lowered to less than 40 percent, and may be reduced another 15 percentage points, Biggs said during an interview on Bloomberg Television “In the Loop” with Betty Liu today.

“It’s a much more bearish environment than I anticipated,” he said. “We are going to have a decline at least back to the lows of last summer. God forbid, maybe even testing the lows of 2008 and 2009.”

The money manager’s optimism on U.S. stocks has gyrated along with the market. He raised the Traxis Global fund’s long equity position to 65 percent after slashing it to 40 percent in September, he said in an Oct. 17 interview. Biggs then boosted the figure to 80 percent, he said two weeks later. The Standard & Poor’s 500 Index dropped five straight months through September before surging 11 percent in October.

European Stocks Extend Losses After Spain Sells Bonds at Auction

European stocks extended losses after borrowing costs rose at a Spanish government bond sale. U.S. index futures and Asian shares were little changed.

BNP Paribas SA and Credit Agricole SA (ACA) paced losses in banks, both dropping at least 2.5 percent. ASML Holding NV (ASML) slid 1.6 percent after Applied Materials Inc. forecast earnings that missed analyst estimates. Centrica Plc (CNA) declined 1.6 percent after the utility warned profits may fall short of forecasts.

The Stoxx 600 slid 1 percent to 234.59 at 9:48 a.m. in London as Spanish 10-year bond yields rose to a euro-era record and French five-year yields jumped to a six-month high. Futures on the Standard & Poor’s 500 Index expiring in December added less than 0.1 percent and the MSCI Asia Pacific Index declined 0.1 percent.

“It’s clear that there’s no escaping the gravity of the European debt story as central bankers continue their struggle to find an appropriate resolution,” said Harley Salt, head of sales trading at IG Markets in Melbourne. “Bond yields can expect to remain very much in focus.”

The Stoxx 600 closed unchanged yesterday, after swinging between gains and losses at least 10 times during the day, as the European Central Bank bought Italian and Spanish bonds and Mario Monti became Italy’s new prime minister. The gauge has lost 19 percent from this year’s high on Feb. 17 as Greece teeters on the edge of a default and other indebted nations grapple with record bond yields.

U.S. Stocks Fall as Fitch Says Europe a Risk to American Banks

U.S. stocks tumbled, erasing yesterday’s gains, as Fitch Ratings said further contagion from Europe’s debt crisis will pose a risk to American banks and amid concern higher oil prices will hamper economic growth.

Financial shares led Standard & Poor’s 500 Index losses as Citigroup Inc. (C) and Morgan Stanley dropped at least 4.1 percent. Dell Inc. (DELL) sank 3.2 percent as the personal computer maker told investors to expect slower sales growth for the rest of the year. Abercrombie & Fitch Co. (ANF) tumbled 14 percent as profit at the clothing retailer trailed estimates. Rambus Inc. (RMBS) plunged 61 percent after losing a jury trial against Micron Technology Inc. (MU) and Hynix Semiconductor Inc. Micron surged 23 percent.

The S&P 500 slid 1.7 percent to 1,236.91 at 4 p.m. New York time. The Dow Jones Industrial Average fell 190.57 points, or 1.6 percent, to 11,905.59. Oil rose above $100 a barrel.

“It’s fear of the unknown spooking the market,” Madelynn Matlock, who helps oversee about $14.5 billion at Huntington Asset Advisors in Cincinnati, said in a telephone interview. “There may be more exposure to Europe out there than people really think even if banks think they are covered. It’s going to be a tough market for quite a while,” she said. “Increasing oil prices is a concern because it’s like a tax on the consumer.”

Stocks extended losses after Fitch said that while U.S. lenders have “manageable direct exposures” to Greece, Ireland, Italy, Portugal and Spain, further turmoil in those markets poses a “serious risk.” Equities also fell after the Bank of England Governor Mervyn King said Britain faces a “markedly weaker” outlook for the economy as Europe’s crisis threatens global growth.

Financial Shares Tumble
Diversified financial companies slumped the most among 24 industries in the S&P 500, losing 3.9 percent as a group. Citigroup decreased 4.1 percent to $26.86. Morgan Stanley (MS) sank 8 percent to $14.66.

JPMorgan Chase & Co. (JPM) and Goldman Sachs Group Inc. (GS), among the world’s biggest traders of credit derivatives, disclosed to shareholders that they have sold protection on more than $5 trillion of debt globally. Just don’t ask them how much of that was issued by Greece, Italy, Ireland, Portugal and Spain, known as the GIIPS.

As concerns mount that those countries may not be creditworthy, investors are being kept in the dark about how much risk U.S. banks face from a default. Firms including Goldman Sachs and JPMorgan don’t provide a full picture of potential losses and gains in such a scenario, giving only net numbers or excluding some derivatives altogether.

No Advantage
“If you don’t have to, generally people don’t see the advantage to doing it,” said Richard Lindsey, a former director of market regulation at the U.S. Securities and Exchange Commission who worked at Bear Stearns Cos. from 1999 through 2006. “On the other hand, if there were a run on Goldman Sachs tomorrow because the rumor was that they had exposure to Greece, you’d see them produce those numbers.”

Dell slumped 3.2 percent to $15.13. The company missed third-quarter revenue estimates after walking away from $2 billion in potential PC sales to focus on more profitable technology. It gave up billions in “low-value” PC opportunities because it wanted to preserve margins, Vice Chairman Jeff Clarke told analysts yesterday.

Abercrombie & Fitch tumbled 14 percent, the biggest decline in the S&P 500, to $48.10. The company’s cost of goods sold rose 34 percent to $429.3 million in the three months ended Oct. 29. Abercrombie, along with other apparel retailers, is contending with higher prices for materials such as cotton and oil and higher labor costs in Asia.

Jury Trial
Rambus plummeted a record 61 percent to $7.11. It lost a $3.95 billion jury trial over its allegations that Micron and Hynix conspired to prevent its memory chips from becoming an industry standard. Micron surged 23 percent, the most in the S&P 500, to $6.74.

Marathon Petroleum Corp., HollyFrontier Corp. and other U.S. refiners declined on an announcement that the Seaway pipeline will be reversed, which may boost the costs of crude and narrow profits from making fuel. Marathon slumped 12 percent to $32.64. HollyFrontier lost 10 percent to $24.82.

Benchmark gauges briefly recovered as Boston Federal Reserve President Eric Rosengren said Europe’s debt crisis may warrant coordinated action by the Fed and the European Central Bank. Earlier today, economic reports also limited losses. Industrial production in the U.S. rose 0.7 percent in October, more than the 0.4 percent median forecast. Confidence among U.S. homebuilders unexpectedly climbed in November.

Not All Fine
“The economic data has been getting better, but I don’t think the market should look at that thinking all is fine,” Wasif Latif, vice president of equity investments at USAA Investment Management Co. in San Antonio, which oversees about $50 billion, said in a telephone interview. “There’s a probability that Europe goes back into recession. That can put pressure on the rest of the world,” he said. “When oil goes up, consumers feel that in their pocketbooks.”

Tyco International Ltd. (TYC) rallied 2.6 percent to $46.99 after quarterly earnings rose more than analysts estimated and the company said its planned separation into three businesses is progressing on schedule.

Autodesk Inc. (ADSK) rose 4.5 percent to $35.58. The maker of design software reported third-quarter profit of 44 cents a share, exceeding the 41-cent average analyst estimate.

ING’s Forecast
The S&P 500 will rally to 1,450 next year as the U.S. economy continues to expand while corporate profits and dividends increase, according to ING Investment Management.

Paul Zemsky, the head of asset allocation for ING, said in a meeting today in New York that while equity markets will remain volatile in the first half of 2012 as European leaders sort through the region’s fiscal issues, stocks will rebound as the American economy expands at a pace of 2.5 percent. Zemsky’s 2012 projection for the S&P 500 would be a gain of 15 percent from yesterday’s close.

Investors shouldn’t “get confused by the noise emanating out of Europe and focus on fundamentals,” said Douglas Cote, chief market strategist at ING, which oversees $550 billion, at the meeting today in New York. Cote predicts profit by S&P 500 companies in 2012 will set a record this year and surpass it in 2012, rising to $105 a share.

Most European Stocks Decline on Debt-Crisis Concern; Carmakers Lead Losses

Most European stocks declined as Italy’s Mario Monti agreed to become the country’s prime minister amid concern the sovereign-debt crisis is hurting the global economy.

Infineon Technologies AG (IFX), Europe’s second-largest semiconductor maker, fell after saying sales will decline in 2012. Bayerische Motoren Werke AG and Daimler AG led a retreat in European carmakers. Vivendi SA (VIV) advanced after reporting third-quarter profit that beat analysts’ estimates.

The Stoxx Europe 600 Index dropped 0.2 percent to 236.48 at 2:24 p.m. in London. Five stocks fell for every three that rose. The gauge earlier swung between gains and losses as the European Central Bank was said to buy Italian and Spanish bonds and the Bank of England warned failure to tackle the debt crisis could affect economic growth.

“The market is reacting very strongly to any news,” said Guillaume Duchesne, an equity strategist at BGL BNP Paribas SA in Luxembourg. “The political situation will remain a determining factor. We’ll see what happens with Italy.”

The benchmark measure has declined 19 percent from this year’s high on Feb. 17 as European Union policy makers struggle to contain a crisis that has Greece on the edge of a default and the region’s highly indebted nations grappling with record bond yields.
Italian Government

Mario Monti said he will be both prime minister and finance minister in his new Italian government. The premier-designate concluded two days of talks with political leaders yesterday in a bid to gain broad support for a Cabinet tasked with pushing through an overhaul of the currency region’s third-biggest economy.

“Market participants do not want to give up hope on a resolution of the EU crisis as the EU remains focused on finding means to expand its bailout fund,” said Stephane Ekolo, chief European strategist at Market Securities in London.

National benchmark indexes fell in 10 of the 18 western- European markets today. France’s CAC 40 Index added 0.2 percent, the U.K.’s FTSE 100 Index slid 0.5 percent and Germany’s DAX Index lost 0.7 percent.

Infineon dropped 3 percent to 6.25 euros. The company expects sales in fiscal 2012 to decline by a “mid-single digit percentage” compared with 2011 as customers hold off on making orders.

BMW and Daimler, the world’s biggest makers of luxury cars, lost 3.3 percent to 55.65 euros and 1.6 percent to 31.98 euros, respectively. Carmakers posted the worst performance among the 19 industry groups in the Stoxx 600 today, losing 1.8 percent.

Vivendi advanced 4.6 percent to 16.19 euros. The owner of the world’s largest video-game and music companies reported third-quarter profit that exceeded analysts’ estimates, helped by its Activision Blizzard and GVT divisions.
Recruiting Companies

Michael Page International Plc, the recruiter that operates across 32 countries, climbed 6.7 percent to 388.6 pence. Randstad Holding NV (RAND), a provider of temporary employees, rose 3.3 percent to 22.83 euros. Adecco SA (ADEN), the world’s biggest supplier of temporary workers, jumped 2 percent to 38.15 Swiss francs. HSBC raised its recommendation on all three stocks to “overweight” from “neutral.”

“The leading indicators for labor markets, vacancies, are coming back and, crucially, corporates are filling them at a reasonable pace,” HSBC analysts wrote in a note.

Home Retail Group Plc (HOME), which owns the Argos catalog stores, sank 7.8 percent to 72.45 pence as Deloitte LLP predicted that this Christmas may be the first in the U.K. with no growth in retail sales since 2008. December retail revenue in the country will be no better than last year’s 36.2 billion pounds ($57 billion), Deloitte said.

“It’s as tough as anyone can remember and with sales flat at best this year it’s going to be harder than ever before to be in the winners’ enclosure,” Ian Geddes, retail partner at Deloitte, said in an interview.

Japanese Stock Futures Fall on Italian Yields; Australian Stocks Advance

Japanese stock futures fell after Italian bond yields surged amid concern the nation’s new government will struggle to secure enough support to ease Europe’s debt crisis. Australian stocks rose.

American depositary receipts of Mitsubishi UFJ Financial Group Inc. (8306), Japan’s biggest lender by market value, dropped 1.5 percent from the closing share price in Tokyo. Those of Panasonic Corp. (6752), a Japanese electronics company, slid 1.1 percent. BHP Billiton Ltd. (BHP), the Australian oil producer, rose 1.2 percent after oil approached $100 a barrel.

Futures on Japan’s Nikkei 225 (NKY) Stock Average expiring in December closed at 8,545 in Chicago yesterday, compared with 8,560 in Osaka, Japan. They were bid in the pre-market at 8,550 in Osaka, at 8:05 a.m. local time. Australia’s S&P/ASX 200 Index added 0.2 percent today. New Zealand’s NZX 50 Index fell 0.2 percent in Wellington.

“Italy is not terminal yet, but it will need evidence of concrete steps toward reform,” said Prasad Patkar, who helps manage about $1 billion at Platypus Asset Management Ltd. in Sydney. “The market will create risk-on and risk-off until evidence emerges one way or another.”

The MSCI World Index dropped 0.3 percent yesterday. Italy’s 10-year yield rose again above the 7 percent threshold that prompted other nations to seek bailouts. Italy’s prime minister designate Mario Monti prepares to meet President Giorgio Napolitano today to present his new government.

U.S. Retail Sales

Futures on the Standard & Poor’s 500 Index were little changed today. The index rose 0.5 percent in New York yesterday after a report showed U.S. retail sales beat estimates.

“The U.S. seems to be back on the recovery path, which is very helpful because it’s the biggest economy in the world and it fixes sentiment in a big way as well,” Platypus Asset’s Patkar said. “Investors around the world would be happy if Europe doesn’t export its toxicity.”

The MSCI Asia Pacific Index declined 14.5 percent this year through yesterday, compared with a 14.1 percent loss by the Stoxx Europe 600 Index. The S&P 500 is little changed for the year. Stocks in the Asian benchmark are valued at 12.7 times estimated earnings on average, compared with 12.7 times for the S&P 500 and 10.3 times for the Stoxx 600.

Crude oil for December delivery rose $1.23, or 1.3 percent, to $99.37 a barrel on the New York Mercantile Exchange, the highest settlement since July 26.

MSCI Inc. , which operates Asia’s benchmark index, will reshuffle the gauge’s members after the close on Nov. 30, it said in a report on its website dated yesterday. Japan’s Sanrio Co., the maker of Hello Kitty products, will be added. Bearing- maker Minebea Co. and Mitsui Engineering & Shipbuilding Co. will be removed from the benchmark.

U.S. Stock-Index Futures Decline on Europe

U.S. stock futures declined as concern that European leaders are still struggling to manage the debt crisis overshadowed reports that may show retail sales and manufacturing improved in the world’s largest economy.

Kellogg Co. (K), the maker of Corn Flakes cereal and Keebler cookies, fell in Germany after Sanford C. Bernstein & Co. cut its recommendation on the stock. Geron Corp. (GERN) tumbled 17 percent after saying it is ending stem-cell therapy research to focus on cancer drugs.

Standard & Poor’s 500 Index futures expiring in December fell 1.1 percent to 1,238.3 at 6:10 a.m. in New York, as Italy’s benchmark borrowing costs soared above 7 percent. Dow Jones Industrial Average futures retreated 111 points, or 0.9 percent, to 11,949.

“Earnings are behind us and now we come back to the problem of instability in Europe,” said Virginie Robert, Paris- based managing director at Raymond James Asset Management International, which oversees about $30 billion. “Borrowing costs aren’t where they should be and that is hurting the market. U.S. economic numbers will be closely watched.”

Stocks rose last week, restoring the year-to-date gain for the S&P 500, as improving economic data and new leaders for Greece and Italy bolstered investor optimism. Shares fell yesterday as Italian borrowing costs rose.

Monti’s Priorities
Mario Monti, Italy’s prime minister-designate, struggled to get political parties to agree to join his Cabinet during talks in Rome yesterday. A government lacking political representation will find it harder to muster support from the parties in parliament to pass unpopular laws. Monti said he’ll wrap up his talks today.

The euro area’s inability to contain its sovereign-debt crisis led to a surge in Italian borrowing costs as investors bet on which nation may need aid next. Monti will try to reassure investors that Italy can cut its 1.9 trillion-euro ($2.6 trillion) debt and spur economic growth that has lagged behind the euro-region average for more than a decade.

In the U.S., retail sales probably rose in October as demand for automobiles improved, giving the world’s largest economy a boost entering the final quarter of 2011, economists said before a report today. The 0.3 percent gain would follow a 1.1 percent September increase, according to the median forecast of 78 economists surveyed by Bloomberg News.

Wholesale prices fell and an index of New York-area manufacturing improved, other reports may show.

Producer Prices
The Labor Department may report the producer price index fell 0.1 percent last month after advancing 0.8 percent in September, according to the survey median. A report from the Federal Reserve Bank of New York may show the so-called Empire State Index, which covers New York, northern New Jersey, and southern Connecticut, rose to minus 2 in November from minus 8.5 last month, according to the Bloomberg survey median.

MSCI Inc. plans to announce the results of its semi-annual index review at 5 p.m. New York time today. Investors and funds that track indexes may buy or sell stocks depending on their inclusion in gauges.

Kellogg dropped 1.3 percent to $49 in Germany. Bernstein cut its recommendation on the shares to “market perform” from “outperform.”

Geron lost 17 percent to $1.83 in German trading. The company that was conducting the first U.S.-authorized trial of human embryonic stem cells is ending the program to focus on its cancer drugs. The Menlo Park, California-based company will eliminate 66 full-time jobs.

Amgen Inc. (AMGN), the world’s largest biotechnology firm, fell 1.7 percent to $56.38 in Germany. The stock was cut to “neutral” from “overweight” at Piper Jaffray Cos.

Home Depot Inc. (HD), the world’s largest home-improvement retailer, climbed 2 percent to $39 in early New York trading after raising its fiscal-year forecast. The company projected annual earnings per share of $2.38, compared with an earlier guidance of $2.34. Home Depot increased its quarterly dividend by 16 percent.

S&P 500 Index Declines as Italian Yields Surge; IBM, Boeing Shares Advance

U.S. stocks declined, snapping a two-day advance in the Standard & Poor’s 500 Index, as a surge in Italian borrowing costs deepened concern Europe will struggle to contain its sovereign debt crisis.

Goldman Sachs Group Inc. and Citigroup Inc. (C) fell at least 1.3 percent as European lenders sank. Bank of America Corp. (BAC) slid 1 percent after selling most of its China Construction Bank Corp. stake to boost capital. Boeing Co. (BA) added 2.6 percent after winning the biggest-ever civil jet orders. International Business Machines Corp. (IBM) rose 0.9 percent as Warren Buffett told CNBC that his company, Berkshire Hathaway Inc. (BRK/A), bought a 5.5 percent stake.

The S&P 500 retreated 0.7 percent to 1,254.58 at 9:52 a.m. New York time. The benchmark gauge advanced 2.8 percent during the previous two days. The Dow Jones Industrial Average decreased 41.09 points, or 0.3 percent, to 12,112.59 today as gains in Boeing and IBM helped limit losses.

“Europe’s putting some pressure,” Peter Jankovskis, who helps manage about $2.4 billion at Oakbrook Investments in Lisle, Illinois, said in a telephone interview. “The market will continue to be sensitive to that for quite some time. In the U.S., there’s a good amount of positive news. Maybe people will look at it as a buying opportunity.”

Stocks rose last week, restoring the year-to-date gain for the S&P 500, as improving economic data and leadership changes in Greece and Italy bolstered investor optimism. Equities tumbled on Nov. 9 as yields on Italian government bonds surged, fueling concern European leaders will struggle to fund bailouts.

Italian Bonds
Italy sold 3 billion euros ($4 billion) of five-year bonds, the maximum target, at the highest yield in more than 14 years as Mario Monti seeks to form a new government to restore investor confidence in public finances. Spanish 10-year bonds slid, pushing the yield on the securities to more than 6 percent for the first time since Aug. 5. German Chancellor Angela Merkel called for an overhaul of the European Union, advocating closer political ties and tighter budget rules.

A gauge of European lenders fell 1.5 percent, driving losses in American banks. Goldman Sachs decreased 1.4 percent to $100.28. Citigroup dropped 1.3 percent to $28.95.

Bank of America fell 1 percent to $6.15. The second-biggest U.S. lender by assets sold about 10.4 billion shares in China Construction Bank through private transactions with a group of investors. The sales are expected to generate an after-tax gain of about $1.8 billion, the lender said today. After the closing, the company will own about 1 percent of the common shares of CCB, Bank of America said.

Boeing Rallies
Boeing rallied 2.6 percent to $68.66. The company signed an agreement with Emirates at the Dubai Air show for 50 of its 777-300ER jets and an option for 20 more, in a deal valued at $26 billion. The accord extends their relationship in the wide- body market, with Emirates operating more than 90 of the 777s for the industry’s biggest such fleet.

IBM added 0.9 percent to $189.13. The holding of about 64 million shares was acquired mostly in the third quarter and cost more than $10 billion, Buffett said.

Bank of America’s Savita Subramanian estimates the S&P 500 will rise to 1,350 in 2012, as the U.S. economy avoids a recession and earnings growth continues to push the gauge higher.

Combined profit by companies in the benchmark equity measure will be $98.25 a share this year and $104.50 next year, according to Subramanian, the head of equity and quantitative strategy, in her first equity forecasts since taking over the role from David Bianco in September. The year-end projection is 6.8 percent higher than the S&P 500’s close on Nov. 11.

“While we expect uncertainty and volatility to remain high well into 2012, the avoidance of a U.S. recession and continued earnings growth could drive the S&P 500 toward the high end of its two-year trading range” of 1,100 to 1,365, a team led by Subramanian wrote in a note dated today.

European Stocks Retreat as Italy’s Borrowing Costs Climb; Hochtief Slides

European stocks dropped as Italy’s borrowing costs rose after the nation sold 3 billion euros ($4.1 billion) of bonds at the highest yield since 1997.

UniCredit SpA (UCG) dropped 6.7 percent after Italy’s largest bank approved a 7.5 billion-euro share sale. Banco Bilbao Vizcaya Argentaria SA (BBVA) led Spanish lenders lower as the nation’s borrowing costs climbed. Hochtief AG (HOT) plunged 11 percent after the construction company said the sale of its airport-operating business has been delayed.

The benchmark Stoxx Europe 600 Index dropped 1.2 percent to 238.09 at 3:03 p.m. in London, with all 19 industry groups declining, as the cost of insuring against default on sovereign and corporate debt advanced, according to traders of credit- default swaps.

“With Italy now in the firing line, the indications are that the euro-zone crisis is reaching a critical phase as we wait to see how quickly and decisively politicians and the European Central Bank will act,” wrote Peter Sullivan, head of equity research at HSBC Holdings Plc in a report dated today.

Stocks initially climbed after Mario Monti, a former European Union competition commissioner, was appointed Italy’s new prime minister, as the country tackles the euro region’s second-biggest debt.

Silvio Berlusconi resigned after defections ended his parliamentary majority and the country’s 10-year bond yield surged over the 7 percent threshold that prompted Greece, Ireland and Portugal to seek EU bailouts.

Italian Bond Auction
Italy sold 3 billion euros of five-year bonds, the maximum target for the auction, as borrowing costs climbed. The Rome- based Treasury sold the bonds to yield 6.29 percent, the highest since June 1997 and up from 5.32 percent at the last auction on Oct. 13. The yield on five-year Italian notes rose 11 basis points to 6.57 percent following the auction.

In Greece, the nation’s finance minister, Evangelos Venizelos, said his priority is to ensure the country gets a sixth loan under an EU-led bailout after Prime Minister Lucas Papademos took charge of a new interim government.

Spiegel magazine reported that German lawmakers are preparing for Greece’s departure from the euro if the debt- strapped country’s new government doesn’t commit to reforms. The magazine did not say where it got the information.

The Stoxx 600 advanced last week after Italy’s Senate approved austerity measures, easing concern the country would need a bailout. The gauge has still fallen 18 percent from this year’s high on Feb. 17 as policy makers struggle to contain a debt crisis that has Greece on the edge of a default.

Benchmark Equity Indexes
National benchmark indexes fell in 14 of the 18 western- European markets today. France’s CAC 40 Index lost 1.8 percent, the U.K.’s FTSE 100 Index slid 1 percent and Germany’s DAX Index dropped 2 percent.

UniCredit sank 6.7 percent to 77 euro cents after the board approved a share sale to boost capital. The Italian lender also reported a 10.6 billion-euro loss for the third quarter, following almost 10 billion euros in goodwill impairments and writedowns, and said it won’t pay a dividend for 2011.

BBVA, Spain’s second-biggest bank, dropped 3.7 percent to 5.94 euros and Banco Santander SA (SAN), Spain’s largest lender, slid 3.3 percent to 5.61 euros and Bankinter SA (BKT) slipped 3.1 percent to 4.12 euros.

Spain’s government securities also slid, pushing the 10- year yield to 6.09 percent, surpassing 6 percent for the first time since the European Central Bank was said to resume buying the nation’s debt on Aug. 8. ECB Governing Council member Jens Weidmann suggested policy makers should end their support of the region’s most indebted nations.

Hochtief, Q-Cells
Hochtief declined 11 percent to 45.63 euros for the biggest drop on the Stoxx 600 after Germany’s largest construction company said that the “macroeconomic situation” has delayed the sale of its airport-operating unit. The company predicted it will post a net loss if the sale isn’t concluded this year.

Q-Cells SE (QCE) slumped 29 percent to 82 euro cents after the German solar cell and module maker posted a third-quarter loss before interest and taxes of 47.3 million euros, wider than analysts had estimated. Q-Cells also announced the resignation of its chief financial officer Marion Helmes.

Solarworld AG (SWV) dropped 13 percent to 3.34 euros after the company reduced its full-year sales outlook and reported third- quarter Ebit of 20.6 million euros, missing analysts’ estimates.

ITV Plc (ITV) climbed 3.6 percent to 66 pence after the U.K.’s biggest terrestrial broadcaster reported a 4.1 percent increase in nine-month revenue to 1.52 billion pounds ($2.4 billion). The company said it is “cautious” about the outlook for the TV market next year.

Japanese Stock Futures, Australian Stocks Rise on Greece, Italy

Japanese stock futures and Australian shares rose amid optimism new governments in Greece and Italy will help contain Europe’s debt crisis, boosting investor confidence in riskier assets.

American depositary receipts of Toyota Motor Corp. (7203), the world’s biggest carmaker by market value, rose 0.8 percent from the closing share price in Tokyo. Those of Komatsu Ltd. (6301), a Japanese machinery maker that gets 23 percent of its sales in China, gained 1 percent after two of China’s best-known economists said the country’s economy will have a “soft landing.” BHP Billiton Ltd. (BHP), Australia’s No. 1 mining company, rose 0.7 percent.

Futures on Japan’s Nikkei 225 (NKY) Stock Average expiring in December closed at 8,595 in Chicago on Nov. 11, up from 8,500 in Osaka, Japan. They were bid in the pre-market at 8,600 in Osaka, at 8:05 a.m. local time. Australia’s S&P/ASX 200 Index climbed 0.3 percent today. New Zealand’s NZX 50 Index rose 0.6 percent in Wellington.

“The situation in Greece has dramatically improved with the appointment of a unity government out there, and Italy looks like it’s getting close to a resolution,” said Angus Gluskie, who manages more than $350 million at White Funds Management in Sydney. “Two of the largest concerns of the market are being partially taken off the table.”

Italy, Greece
The Standard & Poor’s 500 Index gained 2 percent on Nov. 11 in New York after Italy approved debt reduction plans. Mario Monti, former European Union competition commissioner, will lead a new government in Italy after the region’s debt crisis led to the unraveling of a coalition led by Prime Minister Silvio Berlusconi. Futures on the S&P 500 gained 0.6 percent today.

Greek Prime Minister Lucas Papademos said the country’s new government must implement decisions from an Oct. 26 European summit to receive more loans and avoid default.

Two of China’s best-known economists, International Monetary Fund Deputy Managing Director Zhu Min and National Economic Research Institute Director Fan Gang, said the country’s economy was heading for a “soft landing” as growth slows. They spoke at the Asia-Pacific Economic Cooperation forum in Honolulu yesterday.

Japan’s gross domestic product probably grew at an annualized 5.9 percent in the three months ended Sept. 30 after three consecutive quarters of contraction, according to the median forecast of analysts surveyed by Bloomberg News. The data is due today at 8:50 a.m. in Tokyo.

The MSCI Asia Pacific Index fell 15 percent this year through last week, compared with a 0.5 percent gain by the S&P 500 and a 12.6 percent loss by the Stoxx Europe 600 Index. Stocks in the Asian benchmark are valued at 12.7 times estimated earnings on average, compared with 12.8 times for the S&P 500 and 10.4 times for the Stoxx 600.

The London Metal Exchange Index of prices for six industrial metals including copper and aluminum rose 1.8 percent on Nov. 11.

U.S. Stock Futures Tumble as Italian Bond Yields Rise to Euro-Era Record

U.S. stock futures slumped, following a two-day advance in the Standard & Poor’s 500 Index, as a surge in Italian bond yields to euro-era records bolstered concern that Europe’s sovereign debt crisis is worsening.

Bank of America Corp. (BAC) and Morgan Stanley tumbled at least 3.2 percent, following losses in European lenders, after LCH Clearnet SA raised the extra charge it levies on clients for trading Italian government bonds and index-linked securities. Adobe Systems Inc. (ADBE) sank 9.4 percent after saying it will cut jobs as it lessens its focus on older products. Alcoa Inc. (AA) and Chevron Corp. (CVX) slid more than 2.2 percent as commodities fell.

S&P 500 futures expiring in December sank 2 percent to 1,247.50 as of 8:07 a.m. New York time. The benchmark gauge rose 1.8 percent over the previous two days. Dow Jones Industrial Average futures lost 187 points, or 1.5 percent, to 11,936 today. The Stoxx Europe 600 Index decreased 1.6 percent, erasing an earlier advance, as the 10-year Italian note yield topped 7 percent for the first time in the euro era.

“Italian bonds are within a very, very dangerous zone,” said Alberto Espelosin, head of analysis at investment company Ibercaja Gestion SGIIC SA in Zaragoza, Spain. “Any country paying more than 6.5 percent, it just boosts financing costs and makes it hard to reduce deficits. There is high risk aversion and equity markets will reflect this.”

The so-called deposit factor for Italian bonds due in seven-to-10 years will be raised to 11.65 percent, the French unit of LCH Clearnet said in a document on its website dated yesterday. That compares with a charge of 6.65 percent announced on Oct. 7.

Protect Against Losses
Clearing houses guarantee investors’ trades are completed by standing in the middle of two counterparties, and raise margin requirements to protect themselves against losses should one side of the trade fail.

Stocks rose yesterday after Prime Minister Silvio Berlusconi’s offer to resign boosted optimism Italy would appoint a new leader who can tame the debt crisis. Greek Prime Minister George Papandreou’s talks on forming an interim government dragged into a third day as a near-agreement with the biggest opposition party stalled on European demands for written commitments.

American banks tumbled as a gauge of European lenders sank 3.6 percent. Bank of America lost 3.2 percent to $6.32. Morgan Stanley (MS) retreated 4.5 percent to $16.54.

Adobe Tumbles
Adobe slumped 9.4 percent to $27.55. The reduction of 750 jobs, mostly in North America and Europe, will cost $87 million to $94 million before taxes, the company said. After the costs, net income will be 30 cents to 38 cents a share, compared with a previous forecast of 41 cents to 50 cents. The largest maker of graphic-design software is facing an industry shift away from its Flash technology for Internet programming.

Energy and raw material producers dropped as the dollar rose, reducing the appeal of commodities as an alternative investment. Alcoa slid 3 percent to $10.46. Chevron fell 2.2 percent to $106.50.

Yahoo! Inc. rallied 1.4 percent to $16.19. Alibaba Group Holding Ltd. and Softbank Corp. (9984) are talking with private-equity funds about making a bid for all of the company without its blessing, people with knowledge of the matter said.

Alibaba and Softbank, in an effort to buy back stakes owned by Yahoo, have grown impatient with a lack of progress in direct talks with the company, said the people, who asked not to be named because the negotiations are private. Representatives of Sunnyvale, California-based Yahoo, China-based Alibaba and Tokyo-based Softbank declined to comment.

‘Bear Mode’
The S&P 500 may halt its biggest gain in 20 years, according to two indicators studied by technical analysts at UBS AG. October’s 11 percent rally, which was the biggest monthly advance since 1991, failed to leave the S&P 500 above its 200- day average, limiting the potential for a rally, the Zurich- based analysts wrote in a report yesterday. The team also said their model for moving average convergence-divergence, or MACD, is heading into “bear mode.”

“We see the risk of more near-term weakness into next week,” Marc Muller and Michael Riesner wrote in the report. “Given the high volatility, we would see a pullback into next week still as a trading opportunity for aggressive traders, whereas, on the upside, we wouldn’t chase the market.”

U.S. Stocks Advance as Fed Says It May Act to Safeguard Recovery

U.S. stocks advanced, rebounding from a two-day drop in the Standard & Poor’s 500 Index, as the Federal Reserve said economic growth strengthened and it is prepared to take action if needed to safeguard the recovery.

Gauges of commodity and financial shares had the biggest gains in the S&P 500 among 10 industries, rising at least 2.2 percent. Bank of America Corp. (BAC), Chevron Corp. (CVX) and Alcoa Inc. (AA) rallied more than 2.4 percent. MasterCard Inc. (MA) jumped 7 percent as profit beat analysts’ estimates. MF Global Holdings Ltd. tumbled 79 percent in its first day of over-the-counter trading after the futures brokerage filed for bankruptcy, prompting the New York Stock Exchange to delist the shares.

The S&P 500 increased 1.6 percent to 1,237.90 as of 4 p.m. New York time. The benchmark gauge for American equities fell 5.2 percent over the previous two days. The Dow Jones Industrial Average added 178.08 points, or 1.5 percent, to 11,836.04 today.

“People are focused on two comments -- the economy has firmed and the Fed stands ready to take action,” Mark Bronzo, who helps manage $24 billion at Security Global Investors in Irvington, New York, said in a telephone interview. “In addition, the fact that they are not taking action now makes you more comfortable that the economy is doing OK.”

The Federal Open Market Committee said “economic growth strengthened somewhat in the third quarter,” while also saying “significant downside risks” remain to the outlook. Stocks extended gains as Fed Chairman Ben S. Bernanke said additional purchases of mortgage-backed securities are a “viable option” if the state of the economy warrants further easing.

Economic Forecast
Fed officials lowered their outlook for U.S. economic growth in 2012 and forecast that unemployment will average from 8.5 percent to 8.7 percent in the final three months of next year. Forecasts for 2012 growth in U.S. gross domestic product from the five Fed Board members and 12 reserve bank presidents centered around 2.5 percent to 2.9 percent, measured from the fourth quarter of this year to the fourth quarter of next year. For this year, the central tendency forecast for U.S. growth was 1.6 percent to 1.7 percent.

“They are going with no rocking of the boat as long as the improvement continues,” Bruce McCain, who helps oversee about $20 billion as chief investment strategist at the private- banking unit of KeyCorp in Cleveland, said in a telephone interview. “There’s a lot more concern at this point that the Fed would try too hard to juice up things and perhaps complicate an inflation picture that clearly is becoming better. The Fed wants to have as much powder dry as they can simply because if Europe blows up they want to have something in reserve.”

European Debt Crisis
Benchmark gauges rebounded after the biggest two-day drop in almost a month on concern Europe’s crisis was worsening. Greek Prime Minister George Papandreou triggered the latest upheaval in the two-year-long crisis by abruptly announcing on Oct. 31 a parliamentary confidence vote and his desire to hold a referendum on the rescue pact.

Papandreou, his hold on power weakening, was summoned to Cannes, France, for emergency talks on the eve of a Group of 20 summit where he will hear from French President Nicolas Sarkozy that the “only way to resolve Greek debt problems” is through a deal hammered out in a six-day crisis-management marathon. German Chancellor Angela Merkel said today that policy makers “must bring calm to the euro.”

The Morgan Stanley Cyclical Index climbed 1.8 percent on expectations the economy will be able to avoid a recession. The Dow Jones Transportation Average gained 1.3 percent. The KBW Bank Index increased 3.3 percent. Bank of America added 5 percent to $6.72. Alcoa jumped 3.2 percent to $10.70. Chevron rose 2.4 percent to $104.54.

MasterCard Rallies
MasterCard gained 7 percent to $357.66. Chief Executive Officer Ajay Banga, 51, is pushing to wrest market share from larger rival Visa Inc. New U.S. regulations on transaction fees charged to merchants for debit-card purchases also give retailers more say on how those transactions are routed, which may erode Visa’s dominance.

Phone stocks gained after the U.S. House voted to bar new state and local taxes on wireless services. Sprint Nextel Corp. (S) climbed 9.2 percent to $2.72. AT&T Inc. (T) increased 1.3 percent to $29.08.

AOL Inc. (AOL) rallied 13 percent to $15.02. The Internet company that’s struggling to halt a sales slide reported third-quarter earnings that exceeded analysts’ estimates by 65 percent.

MF Global, quoted under the symbol “MFGLQ,” tumbled 79 percent to 25 cents, in its first day of over-the-counter trading after the futures brokerage filed for bankruptcy, prompting the New York Stock Exchange to delist the shares.

No Trade
The stock hasn’t changed hands during a regular trading session since Oct. 28. NYSE Euronext suspended the stock before the New York Stock Exchange opened on Oct. 31. MF Global filed the eighth-largest U.S. bankruptcy this week after failing to find a buyer over the weekend. The futures broker suffered a ratings downgrade and loss of customers after revealing it had investments related to $6.3 billion in European sovereign debt.

Whether the U.S. economy falls into a recession or expands more slowly matters little when it comes to stock-market strategy, according to Richard Bernstein, chief executive officer of Richard Bernstein Advisors LLC.

Playing defense has been more rewarding in the past six months than investing in shares of cyclical companies, which are more susceptible to changes in the pace of economic expansion. Makers of food, beverages, tobacco and other consumer staples are in the defensive category, along with health-care, telephone and utility stocks.

“Investors seem to spend too much time trying to ascertain the probability of a recession occurring,” Bernstein wrote in a report two days ago. A slowdown is enough to justify defensive strategies, favoring shares of companies whose sales and earnings growth is relatively stable, the report said.