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Business Title: Global Equities Soaring May 10 (Bloomberg) -- Stocks rallied around the world, sending the MSCI World Index up the most in 13 months, Greek bonds soared and the euro strengthened after European policy makers announced an almost $1 trillion loan plan to end the region’s sovereign-debt crisis. The MSCI World gauge of stocks in 23 developed nations jumped 4.7 percent at 10:09 a.m. in New York, while the Standard & Poor’s 500 Index rallied 4.1 percent and Spain’s IBEX 35 Index surged 13 percent, its biggest gain on record. The premium demanded to hold Greek 10-year bonds tumbled 587 basis points as the yield on German bunds, Europe’s benchmark government securities, rose 18 basis points. The 10-year Treasury yield climbed 13 basis points. Oil surged as much as 4.5 percent. The VIX, a gauge of stock-market volatility, plunged the most in its two-decade history. Governments of the 16 euro nations agreed today to lend as much as 750 billion euros ($962 billion) to the most-indebted countries. The European Central Bank said it will counter “severe tensions” in “certain” markets by purchasing government and private debt. Concerns that the Greek financial crisis will spread wiped $3.7 trillion from the value of global stock markets last week. “The rally is justified,” said David Kelly, who helps oversee $445 billion as chief market strategist for JPMorgan Funds in New York. “All the actions taken by the European governments and the commitments by central banks were steps in the right direction. The market had sold off because of the fear that this financial crisis would get out of hand. Investors have a chance to look at the economic fundamentals in the U.S. now, which are good and expanding.” Improving Economy The emergency action may allow investors to return their focus to the improving outlook for the global economy. About 69 percent of companies on the MSCI World Index that reported quarterly earnings since April 12 have beaten analysts’ forecasts, according to Bloomberg data. Employment in the U.S. increased in April by the most in four years, the Labor Department said May 7, indicating the recovery is becoming self- sustaining. The euro climbed 1.4 percent to $1.2930, extending its two- day advance to 2.5 percent. The 16-nation currency is down 9.7 percent against the dollar this year. For now, the rescue package “may be viewed as a positive and we may recover some of the losses we had in equities last week,” Oscar Pulido, a portfolio specialist at BlackRock Inc., said in a briefing in Seoul today. “In the longer-term, it’s going to be very much dependent on whether governments in these countries can truly take the measures to reduce the deficits they’ve accumulated.” BlackRock managed $3.36 trillion in assets as of March 31, according to its Web site. Stocks Rebound After Rout The S&P 500 rebounded after last week’s 6.4 percent plunge, the biggest drop in a year. Waves of electronic selling helped push the Dow Jones Industrial Average down as much as 9.2 percent on May 6, the biggest drop since the crash of 1987, before paring losses. All 10 industry groups in the S&P 500 rallied more than 2.4 percent today, led by gains of more than 5 percent in gauges of industrial and financial companies. General Electric Co., Bank of America Corp. and Boeing Co. jumped more than 6.6 percent to lead the Dow Jones Industrial Average up more than 400 points. The VIX, as the Chicago Board Options Exchange Volatility Index is known, fell as much as 37 percent to 25.68 after a record weekly gain last week. The index measures the cost of using options as insurance against declines in the S&P 500. Pound, Default Swaps The pound rose amid speculation Conservative leader David Cameron may forge a coalition government with his Liberal Democrat counterpart Nick Clegg after last week’s election failed to give any one party a parliamentary majority. Sterling appreciated 1.6 percent versus the dollar and strengthened 3.2 percent compared with the yen. The cost of insuring Greece’s government bonds from default plunged, with credit-default swaps on the nation falling 340 basis points to 575.5, according to CMA DataVision prices. The yield on the Greek 10-year bond slid 570 basis points to 6.75 percent, narrowing the extra yield, or spread, to bunds to 378 basis points, from 965 basis points at end of last week. The Portuguese 10-year spread tumbled to 190 basis points from 349 basis points. The Spanish spread declined to 97 basis points from 164 basis points. ‘Mother of All Aid’ “The authorities have put in place the mother of all aid plans, in an effort to prevent further losses in confidence,” Ciaran O’Hagan, a fixed-income strategist at Societe Generale SA in Paris, wrote in a note to investors. “We are seeing standard moves in favor of risk appetite after all the announcements. Whilst the market reaction has been positive, it is still very early days.” The MSCI World Index of 23 developed nations’ stocks rallied 2.6 percent, paring this year’s decline to 3.4 percent. Banco Santander SA, Spain’s largest lender, climbed 21 percent in Madrid, reversing last week’s 18 percent loss. BNP Paribas, the biggest French bank, advanced 18 percent in Paris while Barclays Plc gained 14 percent in London. BP Plc, battling an oil spill in the Gulf of Mexico, was the only declining stock on the Stoxx Europe 600 Index, slipping 1.2 percent as it prepared to lower a second, smaller containment dome over the main leak point after suspending efforts to place an initial cover over the weekend. The MSCI Asia Pacific Index climbed 1.6 percent, snapping five days of losses. Esprit Holdings Ltd., which gets 85 percent of its revenue from Europe, rose 3.7 percent in Hong Kong. Commonwealth Bank of Australia, the nation’s biggest bank by market value, gained 5.2 percent in Sydney. Bridgestone Corp. increased 4.7 percent in Tokyo after the tiremaker boosted its profit forecast.
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