Stocks, Metals Rise as China Inflation Slows; Yen Gains

By Stephen Kirkland & Glenys Sim

Stocks (MXAP) and commodities rose for a second day as Chinese inflation slowed more than forecast. The yen rebounded after a three-day slump took it to the brink of 100 per dollar for the first time since 2009.

The MSCI All-Country World Index (MXWD) advanced 0.3 percent at 8:35 a.m. in New York. Standard & Poor’s 500 Index futures rose 0.2 percent as Alcoa Inc. (AA) began the first-quarter earnings season. The S&P GSCI (SPGSCI) gauge of 24 commodities added 0.4 percent, as copper gained 1.4 percent. Japan’s currency strengthened 0.6 percent to 98.82 per dollar.France’s 10-year bonds fell for the first time in six days. China’s inflation eased last month from a 10-month high, reducing pressure on policy makers to tighten credit as the economy recovers. Federal Reserve Chairman Ben S. Bernanke said economic conditions were far from where he would like them to be. The Bank of Japan last week announced stimulus measures, prompting the yen’s decline.

“Risk appetite is still there for equities,” said Binay Chandgothia, fund manager at Principal Global Investors, which oversees more than $280 billion. “On an incremental basis it’s safe to put money into Japan as a lot of people haven’t yet got onto the bandwagon. I’m not too worried about China -- they won’t tighten policy meaningfully.”

The Stoxx Europe 600 Index added 0.2 percent. Mining companies led gains, with Rio Tinto Group, Lonmin Plc and Kazakhmys Plc rising at least 3 percent. The Stoxx 600 Basic- Resources Index (SXPP) rallied 2.1 percent, the most in a month.

Alcoa Earnings

The gain in S&P 500 futures indicated the benchmark U.S. equity gauge will extend yesterday’s 0.6 percent advance.Alcoa (AA), the largest American aluminum producer, slipped 1.1 percent in German trading as first-quarter earnings exceeded analysts’ estimates while revenue trailed projections. The shares rallied 1.8 percent yesterday.

Income at S&P 500 companies probably fell 1.8 percent in the first three months of the year, the first year-over-year drop since 2009, analyst estimates compiled by Bloomberg show.

The MSCI Emerging Markets Index (MXEF) rose the first time in seven days, adding 0.4 percent. The Hang Seng China Enterprises Index of mainland companies increased 1.7 percent, the most since March 20. The consumer price indexrose 2.1 percent in March from a year earlier, compared with the 2.5 percent median of 38 estimates in a Bloomberg survey. Russia’s Micex Index climbed 0.7 percent.

Thailand’s baht gained, breaching 29 per dollar for the first time since 1997, as demand for the nation’s bonds rose on Japan easing. The gains were “too fast” and the Bank of Thailand is ready to intervene if the currency’s moves are not consistent with fundamentals, Governor Prasarn Trairatvorakul said today.

Yen Rebounds

The yen strengthened against 15 of its 16 major counterparts. The euro rose 0.4 percent to $1.3057, advancing for a fifth-straight day.

France’s 10-year bond yield climbed five basis points to 1.80 percent after falling to a record-low 1.709 percent yesterday. Austrian, Belgian, and Dutch bonds also slid and the yield on benchmark German bunds rose four basis points to 1.27 percent.

Copper rose to $7,558.50 a metric ton and zinc gained 1.4 percent. China is the biggest buyer of the industrial metals. In Chile, the world’s largest copper producer, miners are holding their first nationwide strike for 24 hours to push for greater job security. West Texas Intermediate oil gained 0.3 percent to $93.64 a barrel and gasoline increased 1.1 percent.

To contact the reporters on this story: Stephen Kirkland in London at skirkland@bloomberg.net; Glenys Sim in Singapore at gsim4@bloomberg.net

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