Stocks, Commodities, Euro Gain on Spain Bailout Optimism

Global stocks jumped the most in a month amid better-than-forecast U.S. earnings and industrial production, while the euro and Spanish bonds gained as two German lawmakers said the country is open to Spain seeking a precautionary credit line.

The MSCI All-Country World Index (MXEF) added 1.3 percent at 4 p.m. in New York as benchmark gauges in Spain and Italy surged at least 2.5 percent. The Standard & Poor’s 500 Index rallied 1 percent as Johnson & Johnson and Mattel Inc. advanced after reporting earnings, while Citigroup Inc. (C) climbed as Vikram Pandit stepped down as chief executive officer. The euro rose 0.8 percent to $1.3054, while the dollar weakened versus 11 of 16 major peers. Cocoa and copper led commodities higher.

European stocks extended gains and Spanish bonds reversed earlier losses as Michael Meister and Norbert Barthle, officials within Chancellor Angela Merkel’s Christian Democratic bloc, indicated a reversal to German resistance to a full bailout for Spain. Earnings topped estimates at 73 percent of the 48 companies in the S&P 500 that released results so far.

“Investors are cycling back into risk as earning as well as economic numbers in the U.S. are somewhat better than expected,” Chad Morganlander, a Florham Park, New Jersey-based fund manager at Stifel Nicolaus & Co., which oversees about $138 billion in client assets, said in a telephone interview. “As long as Germany will lend its balance sheet to distressed countries like Spain, then that will embolden investor sentiment.”
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