Tuesday, September 8, 2009

Stocks Rise for Fourth Day as Gold Exceeds $1,000, Dollar Falls

By Daniel Hauck

Sept. 8 (Bloomberg) -- Stocks rose for a fourth day as higher metals and computer-memory prices boosted the earnings outlook for raw-material and technology companies. Gold climbed above $1,000 an ounce for the first time in six months.

The MSCI World Index of 23 developed countries advanced 0.7 percent at 12:17 p.m. in London. Futures on the Standard & Poor’s 500 Index rallied 1.2 percent after U.S. markets were closed for a holiday yesterday. Silver jumped to a 13-month high, copper gained for a fourth day and crude oil increased. The dollar fell against all but one of the 16 most-traded currencies tracked by Bloomberg.

Goldman Sachs Group Inc. raised its forecasts today for metals because of “increasing evidence of a stronger-than- anticipated recovery in global industrial activity.” International Monetary Fund Managing Director Dominique Strauss- Kahn told the Il Sole 24 Ore newspaper that the crisis phase that toppled Lehman Brothers Holdings Inc. in September 2008 “is almost certainly behind us.”

“This is the best phase of the economic cycle,” a team of Credit Suisse Group AG strategists led by London-based Andrew Garthwaite wrote in a note today. “Many economic and financial variables are back to pre-Lehman levels.”

Credit Suisse said that investors should favor stocks over bonds and cash, and forecast gains in equity indexes worldwide ranging from 12 percent for Europe to 23 percent for Japan through mid-2010 as the economy recovers.


The Dow Jones Stoxx 600 Index of European shares rose 0.5 percent. Raw-material producers climbed 2.7 percent as a group and technology shares added 1.3 percent.

BHP Billiton Ltd., the world’s biggest mining company, rose 2.8 percent in London and Rio Tinto Group, the third-largest, gained 3.4 percent as copper, nickel, zinc and tin increased on the London Metals Exchange.

STMicroelectronics NV, Europe’s largest semiconductor maker, advanced 3.4 percent, while Elpida Memory Inc., Japan’s biggest maker of dynamic random access memory, gained 5.4 percent in Tokyo. Prices of the benchmark 1-gigabit computer- memory chip climbed to $1.71 yesterday, from as low as 58 cents in December, according to Dramexchange Technology Inc., operator of Asia’s biggest spot market for the chips.

Cadbury Plc, which soared 38 percent yesterday, increased 1.9 percent. The maker of Dairy Milk chocolates may attract suitors ranging from Nestle SA to Hershey Co. and sell for as much as $21 billion after rejecting Kraft Food Inc.’s $16.7 billion bid yesterday, according to analysts.

U.S. Futures

The gains in U.S. futures indicated the S&P 500 may advance for a third straight day. Apple Inc., maker of the iPod, rose 1.5 percent in pre-market New York trading. The company will host an event tomorrow in San Francisco that may be the first opportunity for Chief Executive Officer Steve Jobs to make a public appearance after his liver transplant.

The MSCI Emerging Markets Index added 1.2 percent, climbing for a fourth straight day. Russia’s Micex index jumped 2.5 percent as oil rose in New York. Russia is surpassing Saudi Arabia in oil exports for the first time since the Soviet Union’s collapse in 1991. China’s Shanghai Composite Index gained 1.7 percent.

Gold for immediate delivery rose to $1,007.70 an ounce, trading within 3 percent of its record $1,032.70 set in March 2008. Copper added 2.3 percent to $6,470 a metric ton and lead rallied 4.4 percent to the highest price since May 2008.

Copper will climb to $7,650 a ton by the end of 2010, up from a previous forecast of $5,800 a ton, Goldman Sachs analyst Jeffrey Currie wrote in a report today. Prices of the metal have more than doubled this year.

Oil Rallies

Oil futures rose above $69 a barrel in New York, gaining as much as 2.5 percent from the last week’s close as the weaker dollar increased demand for commodities as a currency hedge. The contract didn’t settle yesterday because of the Labor day holiday.

Ministers from the Organization of Petroleum Exporting Countries meet tomorrow in Vienna to set production targets. Saudi Arabian Oil Minister Ali al-Naimi said the market is in “good shape,” with price between $68 and $73 a barrel satisfactory for both consumers and producers.

The Dollar Index, which IntercontinentalExchange Inc. uses to track the currency against those of six major U.S. trading partners, fell 1 percent to 77.267.

The dollar weakened 1.3 percent against the pound after a report showed U.K. manufacturing rose in July by three times as much as economists forecast. The U.S. currency declined 1 percent versus the yen.

Euro Rises

The euro rose against the dollar after the German government reported an unexpected drop in industrial production in July, while also revising higher output in June.

“The near-term prospects do not look particularly encouraging for the dollar,” Derek Halpenny, European head of global currency research at Bank of Tokyo-Mitsubishi UFJ Ltd. in London, wrote in an e-mailed report. “Gold has just broken through the $1,000 level and this along with the Dollar Index approaching the low recorded in early August may well encourage another wave of speculative dollar selling.”

The Group of 20 nations has committed about $12 trillion to resuscitate the global economy, according to the International Monetary Fund, including a package of stimulus measures from the Chinese government of about $586 billion. Figures today showed that China’s passenger-car sales surged a record 90 percent last month as tax cuts and government subsidies spurred demand. Full- year sales of cars, trucks and busses may hit 12 million, the government said last week, enough for China to likely surpass the U.S. as the world’s largest auto market.

European borrowers ranging from Fiat SpA and Bayerische Motoren Werke AG to Bank Nederlandse Gemeenten started selling bonds in the busiest day of issuance since the summer vacation lull, according to data compiled by Bloomberg. Italy started marketing its issue of 30-year benchmark bonds, its longest- dated security.

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