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Stocks Advance With Asian Currencies on China Policy Speculation

Bloomberg logoBloomberg 28-03-2014 Liau Y-Sing and Nick Gentle

March 28 (Bloomberg) -- Global stocks climbed for a fourth day, the longest streak of gains in 5 1/2 weeks, Asian currencies strengthened and metals rebounded amid speculation China will do more to support growth.

The MSCI All Country World Index increased 0.2 percent by 8:10 a.m. in London as a measure of Chinese shares in Hong Kong capped its biggest weekly jump since November. The Stoxx Europe 600 Index climbed 0.5 percent and futures on the Standard & Poor’s 500 Index gained 0.2 percent. The Bloomberg JPMorgan Asia Dollar Index rose the fifth time in six days as Malaysia’s ringgit strengthened 0.6 percent. Silver climbed 0.8 percent and copper rebounded 1 percent.

Chinese Premier Li Keqiang said the country has policies in reserve to deal with any economic volatility this year and can’t ignore “difficulties and risks” from a slowdown in the economy, according to a central government-website statement. The U.S. House of Representatives is ready to impose more sanctions on Russian officials for the annexation of Crimea and give aid to Ukraine. Treasuries are heading for their first monthly loss this year before a report that may show consumer spending, the biggest part of the U.S. economy, is increasing.

“Some of the bearish China bets have been taken off the table because of expectation that the Chinese authorities might come up with some stimulus,” said Sim Moh Siong, a foreign- exchange strategist at Bank of Singapore Ltd. “The belief is that they’re coming with something and that should help to stabilize growth and prevent a hard landing. There’s a perception here that perhaps there’s some value in the emerging- market currencies and ringgit is benefiting from it.”

Hang Seng

The MSCI Asia Pacific Index increased 0.7 percent, heading for a 3.2 percent gain for the week and cutting its decline for the year to 3.1 percent. That’s the biggest first-quarter drop since 2009.

The Hang Seng Index climbed 1.1 percent and the Hang Seng China Enterprises Index added 1.3 percent, taking this week’s advance to 6.1 percent. The Shanghai Composite Index dropped 0.2 percent today.

Data this week showed a drop in profit growth for Chinese industrial companies, while a private gauge of manufacturing in the world’s second-largest economy signaled a third month of contraction for the sector. The reports spurred speculation that China’s leaders will act to shore up economic growth.

In Europe, about six stocks climbed for each that retreated on the Stoxx 600, which is up 1.4 percent this week.

Intesa Sanpaolo SpA, Italy’s second-biggest bank, may move after it posted a 5.19 billion-euro ($7.14 billion) fourth- quarter loss as it wrote down goodwill and set aside more money for bad loans. The lender projected a 4.5 billion-euro net profit in 2017 as part of a five-year plan announced today.

Vivendi Bid

Bouygues SA added 0.4 percent after La Tribune reported Chairman and Chief Executive Officer Martin Bouygues yesterday wrote to Vivendi SA promising that no jobs would be cut at unit SFR, even on a voluntary basis, over a three-year period if the company’s 13.5 billion euro bid for the French phone business is successful. Vivendi increased 0.6 percent.

Russia’s Micex Index climbed 0.3 percent, heading for a 2.2 percent gain this week. The measure is on track for its biggest two-week advance since 2009. The ruble dropped 0.4 percent to 35.725 versus the dollar and weakened 0.2 percent versus the euro to 49.0666.

Ukraine reached a preliminary agreement with the International Monetary Fund to unlock $27 billion of support to avert a debt default and limit economic damage from a four-month political crisis.

Won, Kiwi

South Korea’s won gained 0.2 percent to 1,069.15 a dollar, bringing its first weekly advance in three weeks to 1.1 percent. Korea’s currency is the best performer among 12 Asian peers versus the greenback this week, while the ringgit is posting the second-biggest gain, rising 1.1 percent to 3.2737.

New Zealand’s dollar traded at 86.86 U.S. cents, the strongest level since Aug. 2, 2011. The kiwi has gained 5.7 percent this year versus the greenback, the steepest advance among 16 major peers tracked by Bloomberg. The Australian dollar climbed as much as 0.4 percent to 92.95 U.S. cents, the highest intraday level since Nov. 21.

Copper in London rose to $6,624.75 a metric ton. A second week of advance has reduced the industrial metal’s loss for the first three months of 2014 to 10 percent on speculation that China, the biggest user of industrial metals, will take steps to support growth amid concern that supplies from global mines will trail forecasts.

Nickel, Gold

Nickel in London is down 1.4 percent this week, poised for the first weekly drop since the end of January as inventories in LME-tracked warehouses climbed to a record high.

Gold added 0.4 percent to $1,296.81 after closing at the lowest price since Feb. 12 yesterday. Silver rallied to $19.8704 an ounce. Palladium increased 0.4 percent to $762 an ounce, paring its weekly drop.

Federal Reserve Bank of Chicago President Charles Evans said the central bank will probably raise interest rates in the second half of next year and the timing will depend on the pace of inflation.

“I do tend to think inflation’s going to pick up and that will be the reason why we ultimately raise rates,” Evans, who doesn’t vote on policy this year, said in a Bloomberg Television interview with Betty Liu today in Hong Kong. “My own take is it’s most likely to be in the second half of 2015. If I had my druthers, I’d wait a little bit longer than that.”

The S&P 500 closed at 1,849.04 in New York, the lowest level since March 14, while the Nasdaq Composite Index slipped 0.5 percent to the lowest level since Feb. 10.

Financial, technology and consumer companies fell at least 0.5 percent to lead losses among seven of the 10 main industry groups in the S&P 500. A midmorning recovery fizzled and investors resumed a rotation out of the bull market’s biggest winners. Citigroup Inc. dropped 5.4 percent, the most since 2012, after its capital plan failed Federal Reserve stress tests.

Ten-year U.S. Treasury yields were little changed at 2.68 percent after falling one basis point in New York.

--With assistance from Yoshiaki Nohara in Tokyo and Emma O’Brien in Wellington.

To contact the reporters on this story: Liau Y-Sing in Kuala Lumpur at yliau@bloomberg.net; Nick Gentle in Hong Kong at ngentle2@bloomberg.net To contact the editors responsible for this story: Nick Gentle at ngentle2@bloomberg.net Garfield Reynolds

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