Stocks: Monday’s review

Asian stocks climbed for a second day as a report showed China’s manufacturing may expand for the first time in four months and after European leaders inched toward a revamped strategy to contain the region’s debt crisis.

Shares extended their gains as the Chinese manufacturing report, along with the Japanese export data, signaled that Asia’s largest two economies are withstanding Europe’s sovereign debt crisis.
European leaders in Brussels yesterday outlined plans to aid banks, heading toward a revamped strategy to contain the debt crisis. The 13th crisis-management summit in 21 months excluded a forced restructuring of Greece’s debt, sticking with the policy of enticing bondholders to accept “voluntary” losses to help restore the country’s finances. The complete blueprint for the rescue fund will be formed Oct. 26.
Japan’s Nikkei 225 Stock Average gained 1.9 percent after a report showed exports rose more than expected last month. Australia’s S&P/ASX 200 rose 2.7 percent. China’s Shanghai Composite Index advanced 2.3 percent after a report showed China’s manufacturing may expand in October. Hong Kong’s Hang Seng Index jumped 4.1 percent, the most among Asia-Pacific indexes.
Japanese exporters climbed after a report showed the nation’s shipments increased more than expected in September as demand for cars and auto parts rose, a sign the recovery in shipments is withstanding a weakening global economy.
Honda Motor advanced 2.6 percent to 2,355 yen. Toyota Motor Corp., the world’s biggest carmaker by market value, rose 1.3 percent to 2,580 yen and Suzuki Motor Corp., Japan’s No. 4 automaker by sales, climbed 2.7 percent to 1,682 yen.
Bridgestone Corp., a tiremaker, jumped 4.1 percent to 1,764 yen. The company aims to boost annual sales to 3.6 trillion yen ($47 billion) by 2012 as it expands production in China to meet rising demand, Chief Financial Officer Akihiro Eto said on Oct. 21.
Samsung Engineering Co., South Korea’s biggest construction and engineering company by market value, surged 6.3 percent to 237,500 won. The company’s third-quarter operating profit more than doubled to 212.9 billion won ($187.5 million).
Chinese banks rallied after Barclays said the Hong Kong- listed lenders may post 32 percent profit growth on average in the third quarter. Industrial & Commercial Bank of China surged 5.8 percent to HK$4.39. China Construction Bank Corp., the nation’s second-biggest lender, climbed 4.1 percent to HK$5.33. Bank of China Ltd. increased 6 percent to HK$2.81.
Raw material producers advanced as copper and oil futures extended gains. BHP Billiton gained 3.2 percent to A$36.85 in Sydney. Korea Zinc Co., South Korea’s biggest zinc smelter, surged 13 percent to 319,000 won in Seoul. Cnooc Ltd., China’s largest offshore oil producer, increased 6.5 percent to HK$13.68 in Tokyo.

European stocks climbed to their highest level in 11 weeks as signs of stronger growth in China and Japan outweighed a selloff in Greek lenders after a meeting of euro-area leaders discussed the region’s debt crisis. Leaders at yesterday’s summit in Brussels ruled out tapping the European Central Bank’s balance sheet to boost the euro area’s rescue fund, the European Financial Stability Facility, and excluded a forced restructuring of Greece’s debt. The politicians looked at strengthening the International Monetary Fund’s role and outlined plans to aid banks. The complete blueprint for the rescue fund won’t come together until a summit in two days. Like yesterday, it will start with all 27 European Union leaders before the 17 heads of the euro-area economies gather on their own.
Stocks rallied in Asia today after a report showed that China’s manufacturing may expand in October for the first time in four months, snapping the longest contraction since 2009. A separate release showed Japan’s exports increased in September more than economists had forecast.
Luxembourg’s Jean-Claude Juncker, who chairs the group of euro-area finance ministers, said talks on the private sector’s involvement in a second aid package for Greece have focused on losses of as much as 60 percent for bondholders. Reuters yesterday reported that lenders have offered to write down 40 percent of their Greek debt. Austrian Chancellor Werner Faymann told Austrian radio ORF he sees a “good chance” to convince Greece’s private creditors to accept a haircut of as much as 50 percent, while Ireland’s Transport Minister Leo Varadkar told Dublin-based RTE radio that discounts of between 40 percent and 60 percent were being discussed.
National benchmark indexes rose in 15 of the 18 western- European markets today. The U.K.’s FTSE 100 Index gained 1.1 percent. Germany’s DAX Index gained 1.4 percent and France’s CAC 40 Index increased 1.6 percent. Greece’s ASE Index dropped 4.5 percent.
Mining companies were the biggest gainers on the Stoxx 600 as copper rallied on the London Metal Exchange. BHP Billiton, the world’s largest mining company, gained 5.2 percent to 1,996 pence, Rio Tinto soared 7.1 percent to 3,373.5 pence and Xstrata Plc rose 6.8 percent to 1,016 pence.
TomTom surged 19 percent to 3.62 euros, its biggest advance since 2009, after Europe’s biggest maker of portable-navigation devices reported third-quarter net income of 28.9 million euros ($40 million). That beat the average analyst estimate.
Greek banks led declining shares as National Bank of Greece, the country’s largest lender, sunk 21 percent to 1.60 euros, its biggest drop since at least 1992. EFG Eurobank Ergasias, the second largest, slumped 20 percent to 63 euro cents, its biggest plunge since at least 1999.
Nobel Biocare Holding AG soared 14 percent to 11.38 Swiss francs, the largest jump since October 2002, after NZZ am Sonntag reported that EQT Partners AB and Bain Capital LLC are considering buying the world’s second-biggest dental- implant maker. The newspaper cited two unidentified sources.
Swatch Group AG climbed 4.8 percent to 373.50 francs, its highest price in a month, after NZZ also reported that the company’s sales this year will “clearly exceed” 7 billion Swiss francs ($7.9 billion), while growth adjusted for currency swings may reach 9 percent to 11 percent in 2012. Faurecia SA rallied 12 percent to 19.76 euros as Europe’s largest maker of car interiors confirmed its 2011 targets after posting third-quarter sales that rose 16 percent.

U.S. stocks rallied, almost wiping out this year’s decline in the Standard & Poor’s 500 Index, amid takeover deals, higher-than-estimated earnings at Caterpillar and progress in talks to tame Europe’s debt crisis. European leaders in debt-crisis talks this weekend outlined plans to aid banks and ruled out tapping the European Central Bank’s balance sheet to boost the region’s rescue fund. Europe’s 13th crisis-management summit in 21 months also explored how to strengthen the International Monetary Fund’s role. The complete blueprint won’t come together until a summit in two days.
China’s manufacturing may expand in October for the first time in four months, snapping the longest contraction since 2009, after a preliminary index of purchasing managers showed a rebound in new orders and output. The Chinese report, along with Japanese data today showing an increase in exports exceeding economists’ forecasts, signaled that Asia’s largest two economies are withstanding Europe’s sovereign debt crisis.
The U.S. economy probably grew in the third quarter at the fastest pace this year, economists said before a report this week. Nonetheless, Federal Reserve officials Janet Yellen and Daniel Tarullo last week said that more monetary stimulus may be needed. Fed Bank of New York President William C. Dudley today said the central bank has the option of starting a third round of asset purchases to stimulate growth.
Dow 11,913.62 +104.83 +0.89%, Nasdaq 2,699.44 +61.98 +2.35%, S&P 500 1,254.19 +15.94 +1.29%
Caterpillar (CAT)  rallied 5 percent, the most in the Dow, to $91.77. The company said full-year profit will be $6.75 a share and sales will be at the top end of a previously forecast range of $56 billion to $58 billion. Revenue in 2012 will rise 10 to 20 percent, it said.
Some takeover deals helped lift equities today. RightNow Technologies surged 19 percent to $42.94. Oracle Corp. agreed to buy the company for $1.5 billion, gaining customer-service expertise to bolster a new Internet-based product. Healthspring jumped 34 percent to $53.71. Cigna Corp. agreed to buy the health maintenance organization for $3.8 billion in cash to expand the U.S. insurer’s Medicare business.
A gauge of raw material producers in the S&P 500 added 2.3 percent, the biggest gain within 10 industries, as the S&P GSCI Index of commodities rose 2.4 percent. Alcoa, Inc. (AA), the largest U.S. aluminum producer, gained 3.4 percent to $10.58. Freeport-McMoRan Copper & Gold Inc., the world’s largest publicly traded copper miner, advanced 8 percent.
Indexes of telephone, consumer staples and utility companies in the S&P 500, which are least-tied to the economy, retreated. Kimberly-Clark Corp. lost 4.6 percent, the most in the S&P 500, to $69.65. The maker of Scott toilet paper and Huggies diapers cut the high end of its annual profit forecast amid lower demand in North America and some developed markets.