Stocks rose for a fourth day and Greek, Spanish and Italian bonds rallied as European officials agreed to a $229 billion bailout to contain the debt crisis. The Swiss franc weakened and oil advanced for a fourth day.
The MSCI All-Country World Index added 0.5 percent as of 8:10 a.m. in London, taking its weekly gain to 2.6 percent. The Stoxx Europe 600 Index jumped 0.6 percent, while Standard & Poor’s 500 Index futures increased 0.2 percent. The franc sank against all 16 of its major peers. Greek 10-year bond yields fell below 16 percent for the first time since June 8. Crude rose 0.5 percent in New York. Gold slipped for a second day.
Euro-area leaders eased the terms of loans for cash-strapped nations and announced the latest aid for Greece after eight hours of talks. Officials empowered their 440- billion euro ($635 billion) rescue fund to buy debt across stressed nations, helping to erect a firewall around Spain and Italy even as they risked temporary default to lighten the Greek debt burden.
“The situation in Europe will have short-term relief,” said Khiem Do, Hong Kong-based head of multi-asset strategy at Baring Asset Management Ltd., which oversees $10 billion. “The world is not in a recession, earnings-per-share are growing and valuations are cheap, so I definitely think that the rally can last for longer.”
Bank shares led the Stoxx 600 higher, helping the gauge extend its gain this week to 2.1 percent. The MSCI Asia Pacific Index rose 1.1 percent, erasing its loss for the year. Japan’s Nikkei 225 Stock Average and South Korea’s Kospi Index each added 1.2 percent and Hong Kong’s Hang Seng Index jumped 1.8 percent. Thailand’s SET Index rose 1.3 percent and was headed for its highest close since August 1996.
Banks, tech shares
An industry group tracking financial shares had the biggest gain on Asia’s regional index. Mitsubishi UFJ Financial Group Inc. (8306), Japan’s biggest publicly traded bank, jumped 3.3 percent after the Nikkei newspaper reported the bank’s profit probably rose to 400 billion yen ($5 billion) in the quarter ended June. London-based HSBC Holdings Plc rallied 2.8 percent in Hong Kong.
Advantest Corp. and Samsung Electronics Co. paced gains after Microsoft Corp. (MSFT), the world’s largest software maker, and Advanced Micro Devices Inc. (AMD), the second-largest maker of processors for personal computers, reported quarterly profit that topped analyst estimates.
The S&P 500 jumped 1.4 percent to the highest level since July 8. Among 109 S&P 500 companies that have reported earnings since July 11, about 84 percent exceeded the average analyst estimate, according to data compiled by Bloomberg.
The yen retreated from a four-month high against the dollar after Japan’s Finance Minister Yoshihiko Noda reiterated he’s watching markets closely because the yen’s moves have been “one-sided.” The won rose 0.3 percent to 1,051.98 per dollar, after earlier reaching 1,050.05, the strongest level since 2008.
The euro jumped 1.5 percent versus the dollar on Thursday as French President Nicolas Sarkozy reiterated support for the currency after the summit closed, saying it’s an “irreplaceable” achievement of Europe. He compared the transformation of the bailout to the creation of a “European Monetary Fund.” The shared currency was 0.1 percent lower at $1.4408, trimming its weekly gain
The 440 billion-euro European Financial Stability Facility will operate in the secondary markets, aid troubled banks and offer credit lines, European Union leaders said on Thursday after the summit.
“There’s some relief,” Christian Thwaites, the chief executive officer of Sentinel Investments in Montpelier, Vermont, said in a Bloomberg Television interview. “It’s going to be a selective default. The ratings services are likely to downgrade, but it won’t trigger credit default swaps so it’s not a bad deal.”
The euro slid on Friday before a report forecast to show German business confidence declined to the lowest level in eight months in July. The Ifo institute’s business climate index, based on a survey of 7,000 executives, will drop to 113.7 from 114.5 in June, according to the median forecast of economists in a Bloomberg News survey. That’s the least since November.
Ten-year Treasury yields jumped nine basis points on Thursday to close at 3.01 percent. The rate slipped to 3 percent on Friday amid speculation President Barack Obama and lawmakers are getting closer to an agreement to cut the U.S. budget deficit, raise the borrowing limit and avert a default.
The cost of protecting Asia-Pacific corporate and sovereign bonds from default declined, with the Markit iTraxx Japan index falling 2.75 basis points to 118.25, according to Deutsche Bank AG prices. That’s on course for the lowest close since March 22, according to data provider CMA.
The Markit iTraxx Australia index dropped 4.5 basis points to 114.5 basis points while the Markit iTraxx Asia index of 50 investment-grade borrowers outside Japan retreated 5 basis points to 115.
Crude for August delivery advanced 0.5 percent to $99.64 a barrel on the New York Mercantile Exchange. Prices are up 2.6 percent this week. Oil rose on Thursday after the International Energy Agency said it won’t extend a release of oil supplies.
Gold for immediate-delivery declined 0.2 percent to $1,588.10 an ounce, sliding for a second straight day. Bullion reached an all-time high of $1,610.10 on July 19. Cash silver sank 1 percent to $39.0225 an ounce.