European Stock Futures Rise With Asian Shares as Metals Advance

By Richard Frost & Adam Haigh 

European stock-index futures gained and Asian stocks rose the most in five months as optimism grew Italy would form a coalition government, U.S. data pointed to strength in the world’s largest economy and Japan nominated a central bank chief. Metals and the Australian dollar advanced.

Euro Stoxx 50 Index futures gained 0.4 percent at 7:24 a.m. in London, and Standard & Poor’s 500 Index contracts were little changed. The MSCI Asia Pacific Index (MXAP) climbed 1.4 percent, poised for a fourth monthly advance, its longest winning run since September 2009. The Aussie rose 0.3 percent against the dollar and the yen slid 0.1 percent versus the euro. Palladium rallied 0.3 percent and copper in London increased 0.5 percent. Italy is headed for a coalition government amid bondholder pressure, a senior government official said. Data today may show the U.S. economy expanded at a revised 0.5 percent annualized pace in the fourth quarter from an initial 0.1 percent contraction, as Federal Reserve Chairman Ben S. Bernankesaid in increases some interest rates may signal the economy is gaining vigor. Prime Minister Shinzo Abe picked Asian Development Bank President Haruhiko Kuroda for Bank of Japan governor.

“There’s a dawning realization from many people that they are not being aggressive enough with their exposure to equities,” said Glenn Morgan, head of Australian equity sales at Deutsche Bank AG in Sydney. “The macro backdrop is still looking better and companies are delivering. There’s a weight of money sitting in cash, out of the market.”

Nikkei Volatility

About six stocks rose for each that fell on MSCI’s Asian Pacific index, with seven of 10 industrygauges gaining more than 1 percent. South Korea’s Kospi index advanced 1.1 percent. Hong Kong’s Hang Seng Index climbed 1.6 percent, paring its loss this month to 3.3 percent.

The Nikkei 225 Stock Average (NKY) rose 2.7 percent, rebounding from a two-day, 3.5 percent drop and capping a seventh straight monthly gain, the longest winning streak since 2006. The gauge’s 50-day volatility was at 25 today, the highest level since May 2011, data compiled by Bloomberg show. If confirmed as central bank chief, Kuroda’s leadership team is projected to step up monetary stimulus. Abe also nominated BOJ official Hiroshi Nakaso and academic Kikuo Iwata as deputy governors.

The yen slid 0.2 percent to 92.38 per dollar after falling 0.5 percent in the past two days. The euro was little changed versus the greenback, set for a 3.3 percent loss this month.

Australia’s dollar strengthened against most of its major counterparts. Analysts pared bets the central bank will cut its key interest rate after data showed companies will continue to invest into next year.

Currency Setting

Malaysia’s ringgit gained 0.3 percent to 3.092 per dollar. The government plans to tighten rules on the daily setting of a key reference rate for the currency from tomorrow in an effort to boost transparency.

Italian bonds rose yesterday, pushing 10-year yields lower as the government sold debt amid political turmoil. A joint government between Pier Luigi Bersani’s Democratic Party and the forces led by Silvio Berlusconi, a three-time former premier, is “the only possible way,” Finance Undersecretary Gianfranco Polillo said late yesterday in a telephone interview.

The Dow Jones Industrial Average advanced to the highest level in five years yesterday. Bookings for equipment meant to last at least three years minus things such as aircraft climbed 1.9 percent, exceeding all forecasts of economists surveyed by Bloomberg and the biggest gain since December 2011, government data showed. The index of pending sales of existing houses in the U.S. increased 4.5 percent to the highest level since April 2010, a realtors’ report showed.

Bernanke Testimony

Bernanke said the central bank’s easing policies are helping to improve demand for homes and cars, and that the housing market is recovering. He made his semi-annual testimony to Congress after speaking a day earlier in the Senate.

Copper futures rose to $7,912.5 a ton in London. Zinc advanced 0.4 percent. The LME Index (LMEX), which tracks six industrial metals traded in London, has declined 4.1 percent in February, poised for the biggest monthly drop since October.

Gold rose 0.3 percent to $1,602.11 an ounce, trimming a fifth monthly decline in the longest run of losses since 1997 as investors reduced holdings by more than 100 metric tons on concern that U.S. stimulus may be curtailed as the economy recovers. Palladium climbed to $747.35 an ounce.

President Barack Obama made a plea to business leaders to pressure Republicans to compromise to stop automatic federal spending cuts that he warned would slowly damage the U.S. economy. Cuts worth $85 billion begin to take effect tomorrow, with officials in both parties signaling that a deal to head them off is unlikely.

To contact the reporters on this story: Richard Frost in Hong Kong at rfrost4@bloomberg.net; Adam Haigh in Sydney at ahaigh1@bloomberg.net

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