Banks lead increase in stock prices

Stocks rose in Europe and Asia, led by banks and insurers, as investors speculated financial firms will weather credit-market losses. US index futures advanced.

Barclays Plc, the United Kingdom's third-biggest bank, gained in London, while Macquarie Group Ltd advanced in Sydney. Europe's Dow Jones Stoxx 600 Index briefly gave up its gains as the region's carmakers slumped.

The MSCI World Index added 1 percent to 1,482.24 at 12:56 pm in London, extending its rally this week to 3.2 percent. Plans by Lehman Brothers Holdings Inc and UBS AG to raise capital have stoked speculation banks will recover from $232 billion in mortgage-related losses. Futures on the Dow Jones Industrial Average added 0.2 percent yesterday.

"We are further through the bad news," said Lucy MacDonald, chief investment officer of global equities at RCM Ltd in London, which oversees $100 billion. "It's been a very depressed first quarter so sentiment has been depressed enough for a rally to come through."

More than $2.8 trillion in value was erased from global equities in the first quarter as concern deepened credit losses will stifle profit growth and push the US into a recession.

Europe, Asia

Europe's Stoxx 600 advanced 0.7 percent. The UK's FTSE 100 added 0.3 percent, while France's CAC 40 rose 0.6 percent. Germany's DAX increased 0.5 percent.

The MSCI Asia Pacific Index added 3.5 percent, its biggest gain since Feb 14. Japan's Nikkei 225 Stock Average climbed 4.2 percent.

"The bank rally we are seeing is merely the start of the new quarter," said Steen Jakobsen, chief investment officer at Saxo Bank AS. "Right now I am neutral on banks. People are extremely long cash so obviously they want to deploy that, and to some extent we saw that yesterday."

Barclays increased 3 percent to 494.25 pence, extending Tuesday's 6 percent advance. Commerzbank AG rose 3.1 percent to 21.94 euros. Germany's second-largest bank said at a banking conference in London yesterday that it was "well positioned" to ride out the global financial crisis.

Macquarie, Australia's biggest investment bank, surged 9.9 percent to A$57.02. Mizuho Financial Group Inc, Japan's second-biggest publicly traded bank by market value, jumped 9.5 percent to 402,000 yen, set for its largest advance since Jan 25. JPMorgan Chase & Co yesterday upgraded the drugmaker, also citing higher possible sales of the Crestor drug.

STMicroelectronics NV gained 2 percent to 7.25 euros after saying it will buy back as much as 213.3 million euros of its shares.

Europe's largest semiconductor maker will repurchase as many as 30 million shares at the time and price considered appropriate by the company. The shares will be held for use in an employee-stock plan, the company said.

GM, the largest US automaker, lost 24 cents to $19.91 in Germany.

Daimler AG retreated 2.5 percent to 53.94 euros. US sales of its Mercedes-Benz car division dropped 3.7 percent last month and Morgan Stanley downgraded the shares to "underweight" from "overweight".

Agencies

(China Daily 04/03/2008 page17)