Global stocks, US futures bounce back

Global stocks advanced for the first time in three days after better-than-estimated sales from Alstom SA bolstered confidence in earnings. US index futures rose.

Power-plant maker Alstom gained in Paris, while British Land Co rallied the most in two months in London as Morgan Stanley upgraded the UK property company, while Mitsui Fudosan Co rebounded from a two-year low in Tokyo. Microsoft Corp gained in Germany after Goldman, Sachs & Co recommended the stock.

The MSCI World Index added 0.4 percent to 1,475.41 at 11:39 am in London, and futures on the Standard & Poor's 500 Index gained 0.4 percent. The MSCI World, which has lost 7.2 percent in 2008, was valued at 14.7 times profit yesterday, the lowest since at least 1998, according to data compiled by Bloomberg.

"Now investors have the great chance to buy stocks of well-managed companies with growth prospects cheaply," said Herbert Perus, who helps oversee the equivalent of $57 billion as head of global equities at Raiffeisen Capital Management in Vienna.

US two-year Treasury notes declined. Money-market rates in euros fell the most in a month, suggesting concerted efforts by central banks to cut the cost of short-term credit are working.

Europe's Dow Jones Stoxx 600 Index gained 0.7 percent. France's CAC 40 climbed 0.6 percent. The United Kingdom's FTSE 100 added 0.3 percent. Germany's DAX advanced 0.5 percent.

The MSCI Asia Pacific Index gained 1.3 percent. Japan's Nikkei 225 Stock Average gained 2.1 percent, rebounding from its lowest close since October 2005.

The MSCI Emerging Markets Index added less than 0.1 percent, recovering from a three-month low. Benchmark indexes in Bangkok, Bucharest and Jakarta rose more than 2 percent.

SAP climbed 0.7 percent to 33.68 euros, the highest since Jan 4, after the company said it doesn't expect a slowing economy to hurt sales.

"There is today no indication that a changing economic environment, which is still speculative, would impact the demand for enterprise software," Chief Executive Officer Henning Kagermann said in an interview in Palo Alto, California.

Beating expectations

Alstom rallied 4.6 percent to 134.42 euros. The world's third-largest power plant maker said third-quarter sales jumped 20 percent to 4.1 billion euros as surging power needs in Asia and the Middle East bolstered demand for generator turbines. Analysts in a Bloomberg survey predicted 4 billion euros, according to an average of five estimates. Orders advanced 50 percent to 7 billion euros, also exceeding predictions.

"Alstom beating expectations especially in terms of orders is a support for all cyclical sectors," said Karim Bertoni, who helps manage about $24.8 billion at Banque Syz & Co in Geneva. "Many investors went short on these stocks for fears of a slowdown in economic growth."

British Land, Europe's largest real estate company by assets, jumped 5.4 percent to 969 pence, the steepest gain since Nov 20. Segro Plc, the UK's biggest owner of office parks, advanced 3.5 percent to 490 pence.

Morgan Stanley upgraded the stocks to "overweight" from "underweight" as it raised the industry in Europe to "attractive" from "cautious".

Mitsui Fudosan, Japan's second-biggest property developer by market value, climbed 125 yen, or 6.2 percent, to 2,130 yen. Mitsubishi Estate Co, the largest, jumped 160 yen, or 7 percent, to 2,450, its biggest advance since Sept 27.

"The overall real-estate sector is being sold off considerably," Toshihiko Okino, an analyst for UBS AG in Tokyo, wrote in a note to clients dated today. There is "significant upside for major real-estate firms".

Microsoft added 34 cents to $33.57 in Germany after the world's biggest software maker was added to the "conviction buy" list at Goldman Sachs ahead of second-quarter earnings on Jan 24. Goldman has a price estimate of $40 on the shares.

"The near term bull case is compelling," analysts including San Francisco-based Sarah Friar wrote in a note to clients dated Jan 16. The earnings "should highlight stronger than expected PC unit growth, currency tailwinds and a positive stance on upcoming product upgrades".

HSBC Holdings Plc, Europe's biggest bank by market value, climbed 2.7 percent to 773.5 pence, after closing on Wednesday at the lowest since July 2003. Barclays Plc, the UK's third-biggest bank, rose 2.7 percent to 477.75 pence. UBS, Europe's largest bank by assets, gained 0.9 percent to 47.18 Swiss francs.

JPMorgan Chase & Co and Wells Fargo & Co posted results that topped analysts' estimates, limiting losses in US stocks on Wednesday.

"It's getting clearer now that the subprime crisis doesn't affect all banks the same way," said Heino Ruland, an equity strategist at FrankfurtFinanz Partner in Frankfurt.

The Europe Stoxx Retail Index had its steepest gain since Nov 28, led by Royal Ahold NV, Delhaize Group and HMV Plc.

Agencies

(China Daily 01/18/2008 page17)