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Business Title: Stocks, Oil Advance on Manufacturing Growth; Greek Bonds Drop June 15 (Bloomberg) -- Stocks surged, with the Standard & Poor's 500 Index erasing its 2010 loss, and oil rose as growth in New York manufacturing added to signs the global economy is weathering Europe's debt crisis. Greek bonds sank after Moody's Investors Service cut the nation's rating to junk. The S&P 500 climbed 2.4 percent to 1,115.23 at 4 p.m. in New York, the highest close since May 18, as the Federal Reserve Bank of New York's general economic index showed an 11th month of growth. Oil rallied above $77 a barrel and the Reuters/ Jefferies CRB Index of commodities climbed a seventh straight day, the longest streak since March 2007. Greek 10-year bond yields jumped 74 basis points to 9.08 percent. Stocks in Europe rebounded from early losses as News Corp.'s offer for British Sky Broadcasting Plc offset concern Greece's downgrade will worsen the region's debt crisis. U.S. equities also jumped as a government report showed prices of imported goods fell in May, led by the biggest drop in petroleum costs since December 2008, and chipmakers surged on signs of growing demand. "We've moved from recession to recovery and now we're moving into expansion," said Mike Ryan, New York-based head of wealth management research for the Americas at UBS Financial Services Inc., which oversees about $663 billion. "Inflation remains subdued, suggesting the Fed will remain on the sidelines. The risk-off trade is starting to ebb a little bit." 'Minor Victory' The S&P 500's rally today lifted it almost 7 points above 1,108.679, its average level over the past 200 days, a bullish sign to investors who make trading decisions based on charts. The S&P 500 closed below the 200-day average on May 20 for the first time since July 2009 and remained under the trend line for 16 straight sessions before today. "It doesn't tell you that this correction is over but I think people would look at it as a plus," said Michael Shaoul, chairman of Marketfield Asset Management, who oversees $770 million and whose flagship fund beat 97 percent of peers over the last year. "I would call it a minor victory." The S&P 500 tumbled as much as 14 percent from a 19-month high on April 23 through June 7 as concern grew that Europe's debt crisis will derail the economic recovery and BP Plc's leaking well in the Gulf of Mexico triggered the worst oil spill in U.S. history. The S&P 500 has rebounded 6.2 percent since June 7 as concern over European budget deficits eased and investors speculated growth in China and the U.S. will bolster the global recovery. Chipmaker Forecast S&P 500 semiconductor stocks rallied 4.2 percent for the top gain among 24 groups after Taiwan Semiconductor Manufacturing Co., the world's largest contract maker of chips, boosted this year's forecast for global chip industry sales growth to almost 30 percent. Teradyne Inc. rallied 11 percent for the biggest gain in the S&P 500. Intel Corp., the world's largest chipmaker, rose 2.8 percent. General Electric Co. and Boeing Co. paced gains in all 57 industrial companies in the S&P 500. The Fed's so-called Empire State Index rose to 19.6, in line with the median forecast of economists surveyed by Bloomberg News. The 0.6 percent decrease in the import price index added to evidence that subdued inflation will give the Federal Reserve room to keep its benchmark interest rate near zero for an "extended period." CBOE Debuts CBOE Holdings Inc., the last major U.S. securities exchange owned by its members, rose on its first day of trading. CBOE raised $339 million selling 11.7 million shares at $29 each yesterday. The shares rallied 12 percent to $32.49. Treasuries fell, with the 10-year yield rising 5 basis points to 3.31 percent, on reduced demand for the relative safety of government debt. Net buying of long-term U.S. equities, notes and bonds totaled $83 billion in April, compared with net purchases of a record $140.5 billion in March, Treasury Department data showed. Economists in a Bloomberg News survey projected long-term U.S. financial assets would show a net increase of $70 billion in April. The MSCI Asia Pacific Index increased 0.2 percent and about three stocks advanced for each that declined in the Stoxx Europe 600 Index, led by media companies, as the region's benchmark gauge climbed for a fifth straight day. BSkyB, the U.K.'s biggest pay-TV provider, surged 17 percent to 700 pence in London after it rejected an offer for that price from Rupert Murdoch's News Corp. The bid amounted to 7.9 billion pounds ($11.5 billion), which would be the biggest deal in Murdoch's career, according to Bloomberg data. News Corp. rallied 9.5 percent in New York, its biggest gain since March 2009. Emerging Markets The MSCI Emerging Markets Index of 21 countries gained 0.9 percent, rebounding from a 0.4 percent drop earlier today. Russia's Micex index advanced 2.6 percent as oil, the country's main export, rallied to a one-month high. The Dubai Financial Market General Index dropped 1.3 percent to the lowest level since March 2009, after Tristan Cooper, a Moody's analyst, said in an interview in Abu Dhabi that the emirate's state-owned companies may have to restructure more debt. The euro strengthened against 11 of 16 major currencies, while the dollar weakened against 14. The Dollar Index, which gauges the currency against six major trading partners, fell for a second day, dropping 0.6 percent to 85.982. Greek-German Spread The extra yield, or spread, investors demanded to hold Greek 10-year bonds instead of German bunds, Europe's benchmark government debt securities, widened to 641 basis points, the highest since May 7, according to Bloomberg generic data. The bund yield climbed 4 basis points to 2.67 percent. Greek credit swaps signal a 48.5 percent probability the nation will default within five years. The cost of insuring $10 million of Greece's bonds for five years jumped $55,500 to $811,000 a year, making the nation's debt the third most expensive to protect after Venezuela and Argentina, according to CMA DataVision. Standard & Poor's already cut Greece to below investment grade on April 27. Greece, Spain and Portugal are cutting spending to tackle their budget deficits, which swelled as the recession crimped government tax revenue. Greek Prime Minister George Papandreou pledged to bring the deficit, which increased to 13.6 percent of gross domestic product last year, to 8.1 percent of GDP this year and to under the 3 percent European Union limit in 2014. Spain, Portugal Cuts Spain and Portugal need additional budget cuts to meet deficit targets even as their shortfalls threaten to choke growth and produce a "snowball" effect on their debt levels, according to a draft European Commission document obtained by Bloomberg News. The draft report is dated May 26. Spain's borrowing costs rose at an auction of 12- and 18- month bills in Madrid amid concern that the euro-region's fiscal crisis has yet to be contained. The weighted average yield on 4.18 billion euros ($5.1 billion) of the 12-month securities was 2.303 percent, compared with 1.59 percent last month, the Bank of Spain said. The 987.78 million euros of 18-month notes yielded 2.837 percent, compared with 1.951 percent on May 18. Spain, with the third-largest budget deficit in the euro region, is facing higher financing costs as investors doubt the government's capacity to reduce spending. A selloff of debt from so-called peripheral countries accelerated after Greece's credit rating was cut to non-investment grade by Moody's yesterday. Germany's DAX Index of stocks climbed 0.8 percent even as investor confidence fell to 28.7 this month from 45.8 in May, lower than economists forecast, the ZEW Center for European Economic Research said today. Commodities Rally Crude-oil futures rose 2.4 percent to $76.94 a barrel in New York and jumped to as high as $77.16 earlier amid forecasts that government data tomorrow will show U.S. supplies fell for a third week. Natural gas futures rose to the highest price in almost four months as hotter weather boosted electricity demand for air conditioning and as a gain above $5 yesterday signaled a rally. Natural gas for July delivery rose 3.7 percent to $5.189 per million British thermal units, the highest intraday price since February. The Reuters/Jefferies CRB Index of commodities climbed 1.4 percent and reached the highest level since May 13. The measure has rallied seven straight days, the longest winning streak since March 2007. "It's important that commodity prices firm up here," said Bruce Bittles, chief investment strategist at Milwaukee-based Robert W. Baird & Co., which oversees more than $75 billion in client assets. "The firming trend would be helpful in calming fears about a double dip. If they continue to drop that would suggest that the global economy is really losing steam." --With assistance from Kelly Bit, Mark Shenk and Moming Zhou in New York; Mario Parker in Chicago; Paul Tobin in Madrid; Claudia Carpenter, Daniel Tilles and Steve Voss in London. Editors: Michael P. Regan, Nick Baker
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