March 23 (Bloomberg) -- Stocks climbed around the world as investors speculated the Obama administration’s plan to rid banks of toxic assets will spur growth and investor Mark Mobius said a new bull market has begun.
Bank of America Corp. and Citigroup Inc. both soared at least 15 percent as the U.S. Treasury said it will finance as much as $1 trillion in purchases of distressed assets. Germany’s Deutsche Bank AG and Japan’s Mitsubishi UFJ Financial Group Inc. rose more than 4 percent. Petro-Canada rallied 22 percent after agreeing to be bought by Suncor Energy Inc. for C$19.3 billion ($15.6 billion), a record takeover for a Canadian oil company.
“You have to be careful not to miss the opportunity,” said Mobius, who helps oversee about $20 billion of emerging- market assets as executive chairman at San Mateo, California- based Templeton Asset Management Ltd. “With all the negative news, there is a tendency to hold back,” he said in a Bloomberg Television interview from Hong Kong.
The Standard & Poor’s 500 Index gained 4.3 percent to 801.53 at 2:41 p.m. in New York, extending its rally after an industry report showed home sales unexpectedly increased in February. The Dow Jones Industrial Average jumped 312.62 points, or 4.3 percent, to 7,591. The MSCI World Index climbed for the ninth time in 10 days, adding 4 percent. Twelve stocks rose for each that fell on the New York Stock Exchange.
The Treasury’s Public-Private Investment Program will use $75 billion to $100 billion from the $700 billion Troubled Asset Relief Program enacted last year, giving the government “purchasing power” of $500 billion. The Treasury said the program may double “over time.”
Global Rally
The MSCI World, a gauge of 23 developed nations, has added 19 percent since March 9 as Citigroup, Bank of America and JPMorgan Chase & Co. said they made money in the first two months of 2009 and the Federal Reserve agreed to buy $300 billion of government bonds to combat the financial crisis. The 17 percent ascent in the S&P 500 between March 9 and March 18 exceeded any advance by the main benchmark for American equities over a seven-day period since 1939.
The MSCI Emerging Markets Index of 23 developing nations gained 4.6 percent today, erasing its 2009 drop. Mobius, who was voted among the “Top Ten Money Managers of the 20th Century” by the Carson Group, said emerging markets are in “better shape” than developed economies.
‘You Want to Be In’
“You want to be in the market,” David Katz, who oversees $1 billion as chief investment officer of Matrix Asset Advisors, told Bloomberg Radio. “There are a lot of great businesses that could be 100 to 200 percent higher over the next one to two years.”
Europe’s Dow Jones Stoxx 600 Index gained 3 percent, pushing its rebound from a 12-year low on March 9 to 12 percent. The MSCI Asia Pacific Index added 3.7 percent.
The yen and dollar fell against most of major counterparts on speculation the Treasury’s plan will reduce demand for the currencies’ safety.
Bank of America, the largest U.S. lender by assets, surged 17 percent to $7.23. Citigroup, whose biggest shareholder may soon be U.S. taxpayers, soared 16 percent to $3.04. JPMorgan added 14 percent to $26.42.
Deutsche Bank, Germany’s largest bank, rose 8.5 percent to 30.70 euros. Mitsubishi UFJ, Japan’s biggest publicly traded bank, advanced 4.7 percent to 512 yen.
Geithner’s Plan
Treasury Secretary Timothy Geithner has crafted an approach to spur investment funds to purchase -- and banks to unload -- the illiquid securities and loans that have caused credit to dry up. Because the program depends on private investors stepping up, it may be weeks or months before it’s clear whether the approach will work.
“With the government taking most of the downside, that is basically what’s going to entice bids,” Jeremy Siegel, finance professor at the University of Pennsylvania’s Wharton School of Business, told Bloomberg Television. “This is a very, very positive thing for the credit markets.”
While U.S. bank stocks have climbed this month, bonds of the companies yield 8.55 percentage points more than Treasuries, about the widest in 13 years, according to Merrill Lynch & Co. indexes. The gap between yields of financial institutions’ bonds and Treasuries widened even as their shares jumped, suggesting this month’s record rally in financial stocks is in jeopardy. The S&P 500 Financials Index has surged 48 percent from its March 6 low.
Petro-Canada added 22 percent to C$36.20 in Toronto after Suncor Energy agreed to buy the company in an all-share transaction to gain assets in the North Sea, North Africa and Latin America. Suncor shares dropped 1.4 percent to C$30.47.
Takeovers
The deal adds to a series of takeovers this year, including Merck & Co.’s bid for Schering-Plough Corp., Pfizer Inc.’s offer for Wyeth and Agrium Inc.’s pursuit of CF Industries Holdings Inc. CF today told shareholders to reject Agrium’s buyout terms and sweetened its own proposal for rival fertilizer maker Terra Industries Inc.
Tiffany & Co. jumped 13 percent to $22.93, the steepest intraday advance since December. The world’s second-largest luxury-jewelry retailer reported fourth-quarter profit excluding some items of 85 cents a share, beating the average analyst estimate by 8.1 percent.
Barclays Plc climbed 16 percent to 121.5 pence in London, the highest price since January, on speculation Hellman & Friedman LLC will bid for its iShares unit along with a group of private equity firms. A New York-based Hellman & Friedman spokesman declined to comment on the possible deal. Nicola Hankey, a Barclays’ spokeswoman, declined to comment when contacted by Bloomberg News.
Walgreen Earnings Beat
Walgreen Co. rose 10 percent, the most since October, to $26.75. The second-largest U.S. drugstore chain reported quarterly profit and sales that beat the average estimates of analysts surveyed by Bloomberg after the company lowered prices on many non-drug products to lure consumers.
General Electric Co. gained 5.4 percent to $10.05 even after the owner of GE Capital and NBC Universal was downgraded two levels to Aa2 at Moody’s Investors Service, losing its Aaa rating for the first time in four decades. S&P analysts cut GE’s ratings on March 12.
Home Sales Increase
Benchmark indexes extended gains as U.S. sales of previously owned homes unexpectedly climbed in February after record foreclosures brought bargain hunters into the market to take advantage of lower prices. Purchases increased 5.1 percent to an annual rate of 4.72 million from 4.49 million in January, the National Association of Realtors said.
The MSCI World is still down 51 percent from its October 2007 record after credit-related losses at financial firms reached $1.2 trillion and the U.S. economy contracted by the most in 26 years last quarter.
The global gauge of developed markets is valued at about 12 times the earnings of its 1,680 companies, compared with an average ratio of 21.6 this decade. The MSCI Emerging Markets index trades at 9.5 times earnings, compared with an average of 14.1 since 2002, data compiled by Bloomberg show.
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