* ECB held first ever 3-yr liquidity tender in Dec.

    * Longer-term ECB funds to Italy banks more than doubled

MILAN, Jan 9 (Reuters) – Funding from the European Central Bank to Italian lenders rose sharply to nearly 210 billion euros in December as banks in the country took advantage of an unprecedented offer of longer term ECB funds, data from the Bank of Italy showed on Monday.  Reliance on ECB funding for Italian lenders has risen sharply since the end of June, when total borrowing stood at 41.3 billion euros, mirroring growing funding strains caused by the euro zone sovereign debt crisis. The ECB injected 489 billion euros at its first-ever tender of three-year funds on Dec. 21. Italian banks took 116 billion euros, securing nearly 24 percent of the total, three sources told Reuters in December. The Bank of Italy data showed that domestic banks held 160.6 billion euros in longer-term ECB funds at the end of December,more than double the 68.4 billion euros of a month earlier. By contrast, Italian lenders lowered their participation to the ECB’s main refinancing operations in December, with total funding from the seven-day tenders falling just below 50 billion euros from 83.4 billion euros at the end of the previous month.  At the end of November total ECB funding to Italian banks stood at 153.2 billion euros.

Fears that European banks will struggle to raise capital to withstand the spreading debt crisis have intensified since Unicredit priced a rights offer at a deep discount last week. The Italian bank’s shares have since lost 37 percent of their value and trading in rights to buy into the bank’s closely watched cash call have been suspended.             Domestic banks are predicted to be the main buyers of debt Italy is expected sell at an auction later this week, details of which are due to be announced on Tuesday. The Treasury will also give details later on Monday of a planned sale of shorter-dated t-bills. Yields on Italian 10-year bonds have risen above the 7 percent level regarded as unsustainable for public finances, and the country’s debt offers hefty returns for banks borrowing at ultra-low rates from the ECB. Italy’s debt sale and a Spanish auction on Thursday will provide 2012′s first major test of investors’ willingness to plough more money into the euro zone’s troubled sovereigns.  Both countries are struggling to convince investors they can raise enough cash to repay a mountain of debt due in 2012 despite low growth, weak public finances and downgrade threats.

Source: http://www.reuters.com

(Reporting by Valentina Za; Graphic by Scott Barber; Editing by Catherine Evans)

The euro rose as the two leaders met in Berlin to flesh out a rulebook for budgetary discipline negotiated at a Dec. 9 summit that seeks to create a “fiscal compact” for the 17- member euro area. At their first meeting of 2012, they also plan to discuss a financial-transaction tax, progress on Greece’s second bailout and a Jan. 30 European summit that will focus on bolstering growth, the German government said.

The German and French leaders have sponsored a plan to draw up new fiscal guidelines by March to resolve a crisis that began in Greecemore than two years ago. As the contagion moves to the euro-area’s core, policy makers are struggling to persuade investors they can contain the risk and assure the single currency’s survival. Merkel and Sarkozy are due to hold a joint press conference at about 1:30 p.m. Berlin time.

Fixing the crisis requires more “German largesse” through the current bailout programs, Goldman Sachs Group Inc. Chief European Economist Huw Pill told a conference in London today. “Starting today with Mrs Merkel’s meeting with Mr Sarkozy, it’s important we do start to see some progress.”

Euro, Stocks

The euro rose 0.3 percent to trade at $1.2754 at 12:19 p.m. Frankfurt time. The single currency has extended its decline against the U.S. dollar last year, sliding 1.5 percent so far this year. The Euro Stoxx 50 (SX5E) Index declined 0.3 percent after earlier gains.

Bond yields declined after borrowing costs for sovereign debt climbed last week. Spanish 10-year yields declined three basis points after rising by the most in almost 17 years last week on concern that the government will struggle to cut budget deficits amid the economic slowdown. Spain, Italy, the Netherlands, Austria and Germany plan to sell bonds this week, offering a gauge of market confidence.

The meeting will be followed by a round of talks among euro-area leaders before the next summit meeting in Brussels on Jan. 30. Italian Prime Minister Mario Monti also will visit Berlin this week, and Sarkozy and Merkel will both travel to Rome on Jan. 20 for negotiations with the Italian government.

Among the moving parts in planning to resolve the crisis are Greek negotiations with bondholders, in their seventh month, to cut the country’s debt load in half. Olivier Blanchard, the International Monetary Fund’s chief economist, said Jan. 6 that debt reduction for Greece “could have to be larger” and the numbers will have to be worked out.

‘Not Good’

“The numbers are not good” for Greece, Blanchard said on CNBC television. “There’ll have to be substantial haircuts.”

IMF Managing Director Christine Lagarde is due in Berlin for talks with Merkel tomorrow, chief German government spokesman Steffen Seibert told reporters.

The plan to provide a second Greek bailout “must be implemented” and requires “resolute” budget consolidation by Greece’s government, Seibert said. The blueprint backed by European Union leaders in October remains the “clear path forward” for Greece.

Assembling the fiscal compact, which anchors debt limits into national constitutions and accelerates sanctions for violators, will entail creating a framework for euro members and other EU states to draw up rules among themselves. The refusal by the U.K. to participate in a plan to alter EU treaties could complicate efforts by euro-area governments seeking to use EU institutions to police any new debt scheme.

Belgian Test

Europe’s newfound powers over national taxing and spending will get their first test this week when the European Commission prodsBelgium to make deeper savings just a week into the budget year.

Under authority granted last month, the commission on Jan. 11 will decide whether an emergency Belgian spending freeze is enough to put the deficit on track to fall below euro-area limits in 2012. A negative verdict would expose Belgium to potential sanctions in a precedent-setting trial of rules.

Merkel and Sarkozy may also discuss funding for the European bailout fund today. Germany’s opposition to increasing the so-called firewall for struggling states was underscored last week, with German lawmakers expressing their resistance to raising the 500 billion-euro ($636 billion) ceiling for the permanent European Stability Mechanism, scheduled to go into effect this year.

No More

“There won’t be 1 cent more,” Markus Ferber, a European Parliament lawmaker from the Merkel-aligned Christian Social Union, said at a party meeting in the Bavarian town of Wildbad Kreuth on Jan. 5. Hans Michelbach, the ranking CSU member in the German parliament’s finance committee, said in an interview that “you can’t keep throwing more money at the problem, and that’s what increasing the ceiling would mean.”

The German and French leaders will also discuss options for introducing a financial-transaction tax after Sarkozy said that France was ready to go it alone if necessary. Germany favors a Europe-wide tax and will lobby governments to agree on such a levy in the coming “weeks and months,” Seibert said.

Bringing the Italian premier into the fold contrasts with the tendency by Merkel and Sarkozy to hone a Franco-German position on crisis matters. It may mark a vote of confidence in the unelected Monti, who has pushed through budget cuts demanded by the EU after the resignation of Silvio Berlusconi.

ECB Role

Comments by Sarkozy and Italian Economic Development Minister Corrado Passera suggested a joint push for a greater European Central Bank role, a move Merkel has resisted.

Europe must have a “real central bank with the tools to do the job on stability and liquidity in the markets,” Passera said at a conference in Paris last week. Sarkozy said “all EU members and institutions must meet their responsibilities.”

Europe is “slowly but surely” mastering the debt crisis, even if a solution has taken longer than hoped, EU President Herman Van Rompuy told Belgian broadcaster RTBF.

“We’ll put this crisis behind us, but it has taken longer than we hoped for,” Van Rompuy said yesterday. “We often acted a bit late and our decisions were often a bit too weak. But in most cases, we’ve worked in the right direction.”

To contact the reporter on this story: Patrick Donahue in Berlin at atpdonahue1@bloomberg.net.

To contact the editor responsible for this story: James Hertling at jhertling@bloomberg.net

Dow Jones industrial average (INDU), S&P 500 (SPX) and Nasdaq (COMP) futures were mixed ahead of the opening bell Monday. Stock futures indicate the possible direction of the markets when they open at 9:30 a.m. ET.

Aluminum producer Alcoa (AA,Fortune 500) will start off the earnings season after the closing bell, as the first Dow component to report results for the final three months of 2011. Analysts expect a big profit drop and a sales increase of 2% from a year ago, according to estimates from Thomson Reuters.

Overall, earnings for companies in the S&P 500 are expected to be up 7.5% in the final three months of 2011, versus the same period in 2010.

Investors will also be closely watching for any developments out of a meeting between German Chancellor Angela Merkel and French President Nicolas Sarkozy. The two leaders are discussing their strategy for rescuing the euro and preparing for a European summit at the end of the month.

Europe’s debt crisis: ‘No clear end in sight’

U.S. stocks ended mostly lower Friday, as worries about Europe’s debt crisis dampened enthusiasm over a better-than-expected U.S. jobs report.

World markets: European stocks were lower in morning trading. Britain’s FTSE 100 (UKX) and France’s CAC 40 (CAC40) shed 0.3%, while the DAX (DAX) in Germany fell 0.5%.

Asian markets ended higher. The Shanghai Composite (SHCOMP) gained 2.9% and the Hang Seng (HSI) in Hong Kong added 1.5%. Tokyo was closed Monday for a national holiday.

Economy: The Federal Reserve will release data on consumer credit for the month of November Monday afternoon. Analysts surveyed by Briefing.com expect consumer credit to have increased by $7 billion, after increasing by $7.6 billion in October.

Companies: Novartis (NVS) shares slipped 0.4% in premarket trading, after the Swiss pharmaceutical company recalled bottles of over-the-counter drugs, including Excedrin and Bufferin, because of complaints about mislabeled and broken pills.

Currencies and commodities: The dollar fell against the euro, the British pound and the Japanese yen.

Oil for February delivery slipped 51 cents to $101.05 a barrel.

Gold futures for February delivery added $1.10 to $1,617.90 an ounce.

Bonds: The price on the benchmark 10-year U.S. Treasury fell, pushing the yield up to 1.97% from 1.96% late Friday.

Source: http://www.money.cnn.com

Herbert Knosowski/European Pressphoto AgencyGerman Chancellor Angela Merkel delivered a statement on the resignation of Defense Minister Karl-Theodor zu Guttenberg in Berlin Tuesday.
Mr. Zu Guttenberg’s resignation comes as Ms. Merkel’s governing coalition is under pressure from a series of state elections this year, including in the key state of Baden-Württemberg later this month.
A poll conducted by the Forsa surveying institute for the RTL broadcaster and Stern magazine sees the CDU in Baden-Württemberg at 39% and its liberal coalition partner FDP at 6%, or 45% together. The opposition Social Democrats and Greens, jointly, would garner the same percentage, the poll says.
A national poll forecasts the opposition jointly at 43%, or four percentage points ahead of Ms. Merkel’s governing coalition.
“Even as many citizens were opposing the resignation of the defense minister, the scandal still led to irritation and shock among the [CDU's] own supporters,” said Manfred Güllner, the head of the Forsa surveying institute.
Ms. Merkel’s CDU suffered a major defeat in an election in the city-state of Hamburg, which the opposition Social Democrats won. The German Chancellor also needed to reshuffle the cabinet rapidly to be able to concentrate on a major overhaul of the euro zone to be negotiated at a summit of European Union leaders next week, and to be decided upon at an EU summit in late March.

Economists are confident the ECB’s Governing Council won’t raise its main interest rate from a record low of 1% at its policy meeting Thursday, but they say ECB President Jean-Claude Trichet may harden his anti-inflation rhetoric to show a rate rise is getting closer.
After the last policy meeting Feb. 3, Mr. Trichet said ECB interest rates remain appropriate but close monitoring of price developments was warranted. He said inflation would probably be above the ECB’s target of just below 2% this year before eventually moderating.
“With the bank stress tests underway and still a lot of uncertainty regarding the endgame of the debt crisis, the ECB will be wary to pull the trigger now,” Peter Vanden Houte, an economist at ING, said in a note. “We see a first rate hike only in the fourth quarter of the year.”
The Eurostat data showed the monthly jump in producer prices was driven by energy and intermediate goods. Producer prices for energy rose 3.2% in January, the sharpest gain since July 2008, while intermediate goods prices rose 1.5%, matching the record gain seen in January 1995. However, even stripping out construction and energy, industrial producer prices rose 0.8% on the month, the sharpest gain in 16 years.
More up-to-date surveys suggest the rally in producer prices is continuing. A survey of purchasing managers in the euro-zone manufacturing sector by financial information firm Markit released Tuesday showed input costs and output prices both increasing at record rates in February.
Although producer prices for intermediate goods and energy surged in January, factory gate prices for consumer-related goods posted only modest gains, a sign that demand in that sector isn’t as strong. Producer prices for durable consumer goods rose 0.2% on a monthly basis in January, while factory-gate prices for nondurable consumer goods gained 0.4%, both repeating the increases seen in December.
Write to Nicholas Winning at nick.winning@dowjones.com

European stocks pared some of their early losses but remained weak Wednesday, as concerns that rising oil prices could cut into global economic growth weighed on the heavyweight resources and oil and gas sectors.
This, together with the uncertainty in the Middle East and North Africa, is probably costing the equity market 7-8% in crude terms at the moment, said Jim Reid, strategist at Deutsche Bank.
“The threat of contagion within the region still very much alive,” said Simon Denham, head of Capital Spreads in London, noting that stock markets across the Middle East are continuing to sell off aggressively and anything relatively upbeat in terms of economic data or corporate results has been overshadowed.
By 1215 GMT, the benchmark Stoxx Europe 600 index was 0.5% lower at 283.17. London’s FTSE 100 index was 0.4% lower at 5911.04, Frankfurt’s DAX index was 0.4% weaker at 7191.76, and Paris’s CAC-40 index was down 0.6% to 4044.12.
At the same time, April Nymex crude oil futures traded 34 cents higher at $99.97 per barrel, still close to the psychologically-important $100 per barrel level. Traders said that the negative impact of that movement was compounded by comments by Federal Reserve Chairman Ben Bernanke, who said an increase in the price of oil and other commodities could threaten both economic growth and overall price stability.
Commodity stocks slipped as weak metal prices weighed on the resources sector. The Stoxx Europe 600 basic resources index fell 0.8%. Moreover, major oil stocks tumbled as fears the uncertainty in the MENA region could hamper oil supply further weighed on prices. BP fell 0.9%, Royal Dutch Shell lost 1.3%, Total shed 0.9% and Eni slipped 0.6%. The Stoxx Europe 600 oil and gas index fell 0.6%.
The selling of oil producers’ shares in rising oil markets is a sign of increasing fears of systemic risk, said Olivier Jakob, managing director of Petromatrix. “It is impossible for all asset managers to be fully hedged against the doomsday scenario of a breakdown in Saudi Arabia or Iran, and that could lead to an acceleration of risk reduction as stocks are basically back to their 2007-2008 peaks while commodity prices continue to climb to historical highs,” he added.
Elsewhere, insurance shares fell sharply after Swiss Re said it estimates that the insurance industry faces losses of up to $12 billion from the recent earthquake in Christchurch, New Zealand, saying its own share of the loss may amount to $800 million. Swiss Re lost 1.8%, Munich Re fell 2.9% and AXA shed 2.1%. The Stoxx Europe 600 insurance index was down 1.2%.
Earlier, an economic report showed factory gate prices in the euro zone posted their sharpest monthly gain in 29 years in January, the latest sign that inflationary pressures are building faster than expected, ahead of the European Central Bank’s policy meeting Thursday.
Attention now turns to the monthly U.S. ADP employment report for February at 1315 GMT, widely seen as a precursor to Friday’s nonfarm payrolls release. Ahead of this, Wall Street stock futures were mixed. At 1220 GMT, the March Dow Jones Industrial Average futures contract was down 1.5% at 12,057 but the March S&P 500 futures contract up 0.3% at 1305.40.
In Asia overnight, stock markets sold off after weakness in U.S. stocks Tuesday and a rise in oil prices as the turmoil in Libya continued.
Japan’s Nikkei Stock Average closed 2.4% lower, Australia’s S&P/ASX 200 fell 0.5%, and South Korea’s Kospi Composite shed 0.6%. Hong Kong’s Hang Seng Index fell 1.5% and China’s Shanghai Composite lost 0.2%.
In the European foreign exchanges, the euro and sterling were firmer despite the ‘risk off’ trades in other markets.
At 1220 GMT, the euro was trading at $1.3822, up from $1.3778 in late New York trade Tuesday, while sterling traded at $1.6304, up from $1.6260. The dollar was at Y81.99, up from Y81.86.
Spot gold was down $1.00 at $1433.40 after recently touching a fresh record high of $1435.00 per troy ounce as investors flooded back into this safe haven.
Similarly, in the core sovereign debt market, benchmark German bunds for March delivery traded 0.02 higher at 124.08.
-By Ishaq Siddiqi, Dow Jones Newswires; +44-20-7842-9488; ishaq.siddiqi@dowjones.com

Ecobank Transnational Ltd., the Lome, Togo-based lender, said it will “arrange and syndicate” a $300 million facility to finance the debt of Ghana’s lone oil refinery.

Ecobank’s investment branch, Ecobank Development Corp., was contracted by the Ghanaian government to “advise on the financial restructuring of Tema Oil Refinery,” Chief Executive Officer Arnold Ekpe said in a statement published in the Accra- based Ghanaian Times today. Ecobank’s Ghanaian unit will also act as an adviser.

The advisers will review the refinery’s debt and arrange another facility of $300 million to “strengthen Tema Oil Refinery’s balance sheet,” Ekpe said.

The state-owned refinery, based about 30 kilometers (19 miles) from the capital, Accra, has been out of operation since early this year for maintenance and recently because of difficulties it is having in sourcing supplies of crude.

Ghana is set to become one of Africa’s newest oil exporters in late 2010 when production begins at the offshore Jubilee field, which was discovered in June 2007 and has potential resources of as much as 1.8 billion barrels, according to Tullow Oil Plc.

Ecobank Development Corp. was co-adviser on Ghana’s $750 million sovereign bond and lead adviser on its sale of Ghana Telecom to London-based Vodaphone Plc., according to the statement.

(Bloomberg)

Bank of England official Andrew Haldane said the crisis has shown that big banks are less stable than smaller ones and called for a revamp of lenders’ business models to make the financial system more resilient.

“There is not a scrap of evidence of economies of scale or scope in banking — of bigger or broader being better — beyond a low size threshold,” Haldane, the bank’s executive director for financial stability, said in a speech yesterday in Leeds, England. “Big banks have if anything been found to be less stable than their smaller counterparts, requiring on average larger-scale support.”

Finance minister Alistair Darling has stopped short of suggesting a breakup for the biggest lenders in his plans to revamp rules governing the industry. Nobel-Prize winning economist Joseph Stiglitz said this week that some banks may have become even larger now, evidence that financial system problems are “worse than they were in 2007.”

“Loss of trust has been the root cause of the devastating impact felt globally since the credit crunch began,” said Haldane. “It also explains why the road to recovery in credit, and thus in the real economy, may be long and winding.”

King said earlier this year that banks that are too big to fail are too big to exist. The U.K. opposition Conservative Party says it will scrap the Financial Services Authority regulator and hand powers over lenders deemed too big to fail to the central bank if it wins the next election due by June 2010.

Darling’s Plans

Darling has pledged more intrusive supervision of Britain’s largest banks, forcing them to hold more capital and taking steps to improve competition and curb executive pay. His recommendations stop short of requiring limits on their size.

Haldane said that there may be “diseconomies of scale” for banks to enable long-term relationships between borrowers and lenders.

“The desire to make loans a tradable commodity led to a loss of information, as transactions replaced relationships and quantity trumped quality,” Haldane said. “Within the space of a decade, banks went from monogamy to speed-dating.”

Haldane also recommended that banks not bundle services or diversify to prevent spillovers if one part of the business runs into trouble. He said that the business model of a mutual or a building society, where the banks’ savers and borrowers are also its owners, would diminish incentives for bankers to engage in risky deals for higher profits.

Haldane called for banks to initiate change instead of waiting for regulators to impose it.

“In repairing public trust, it would be preferable if banks were seen to be initiating root and branch reform themselves, rather than having it thrust upon them,” he said.

Enhanced regulation measures including higher capital and liquidity buffers will help to cleanse balance sheets, though they may be insufficient to rebuild public confidence in the banking system, Haldane said.

“It is lack of trust — and hence credit — that may shape the recovery,” Haldane said. “Based on past evidence, as the Governor has noted recently, we might anticipate a protracted period of repair.”

(Bloomberg)

German investor confidence rose to the highest level in more than three years in September after the economic recovery gathered strength and stocks surged.

The ZEW Center for European Economic Research said its index of investor and analyst expectations, which aims to predict developments six months ahead, increased to 57.7 from 56.1 in August. Economists predicted the index would rise to 60, the median of 39 forecasts in a Bloomberg News survey showed.

Improving factory orders, exports and business confidence suggest growth is accelerating after Germany unexpectedly exited its worst recession since World War II in the second quarter. The benchmark DAX index has rebounded 52 percent from its March trough and reached the highest level in almost a year last week as companies worldwide from Goldman Sachs Group Inc to Bayer AG posted better-than-projected earnings.

The ZEW’s gain “may be less than expected, but it’s still good news,” said Klaus Baader, chief European economist at Societe Generale in London. “It does however show that the pace of the upswing can’t be maintained. Next year is going to be more difficult with unemployment rising and government stimulus petering out.”

ZEW’s gauge of the current economic situation rose to minus 74, less than economists had forecast, from minus 77.2 in August. The euro fell about a fifth of a cent after the report was published, to $1.4590 at 11:30 a.m. in Frankfurt.

Deep Recession

The Economy Ministry has indicated its forecast for a 6 percent economic contraction this year may be too pessimistic.

Improving global trade is boosting demand for exports while the government’s 95 billion-euro ($138 billion) stimulus package is spurring spending at home. The package includes infrastructure investment and a 2,500-euro payment for people who trade in their old car and buy a new one.

Bayer, Germany’s largest drug maker and a supplier of plastics to the car industry, on July 29 posted net income of 532 million euros, beating the 393.1 million euros forecast by analysts in a Bloomberg survey.

Economic growth may slow as stimulus packages expire and rising unemployment damps consumer spending. The 5 billion-euro “cash-for-clunkers” fund, which boosted new vehicle registrations by 22.8 percent in the first five months of the year, ran dry earlier this month.

Rising Unemployment

While Bundesbank President Axel Weber has predicted the third quarter “will again signal a strong pick-up,” he said on Sept. 4 that a more robust global recovery is needed for Germany to overcome all its economic weaknesses. The Bundesbank expects unemployment to rise to 10.5 percent in 2010 from 8.3 percent today as companies cut costs to restore profit.

“Economic growth will be very bumpy next year,” said Arnd Schaefer, an economist at WestLB in Duesseldorf. “We won’t see a real upswing until 2011. Unemployment will hit next year and be a real damper.”

The European Commission yesterday forecast that the German economy will barely grow in the fourth quarter after expanding 0.7 percent in the three months through September. It grew 0.3 percent in the second quarter from the first.

The DAX is still 10 percent below the level it was at before Lehman Brothers Holdings Inc collapsed on Sept. 15 last year, triggering a global recession.

Germany’s Kiel Institute for World Economics said on Sept. 9 that Europe’s largest economy will shrink 4.9 percent this year and expand 1 percent in 2010.

European stocks advanced for a seventh day, the longest stretch of gains since August 2007, as companies from Caterpillar Inc. to DuPont Co. and UnitedHealth Group Inc. reported earnings that beat analysts’ estimates.

William Morrison Supermarkets Plc jumped 10 percent after saying earnings will beat its forecasts. Actelion Ltd., Switzerland’s biggest biotechnology company, added 3.9 percent after raising its sales and profit outlook for the year. Nokia Oyj slipped 2.9 percent after Morgan Stanley recommended selling shares of the world’s largest maker of mobile phones.

Europe’s Dow Jones Stoxx 600 Index rose 0.9 percent to 215.17 at 12:40 p.m. in London, heading for a close at the highest level since November. The measure has climbed 9.1 percent since July 10 as companies from Goldman Sachs Group Inc. to Johnson & Johnson posted better-than-estimated results and the Conference Board’s gauge of the U.S. economic outlook increased for a third straight month.

“Going forward, we should make gains,” said Jeremy Beckwith, who oversees $9.9 billion as chief investment officer at Kleinwort Benson in London. “Data is showing that later this year and next year economic growth is returning.”

Futures on the Standard & Poor’s 500 Index added 0.4 percent today as Caterpillar, the world’s biggest maker of construction equipment, reported second-quarter profit that beat analysts’ estimates and lifted its 2009 forecast.

DuPont Earnings

DuPont, the third-largest U.S. chemical maker, posted second-quarter profit that beat analysts’ estimates as the company eliminated jobs and sold more genetically modified crop seeds. UnitedHealth, the top U.S. insurer by sales, said second- quarter profit more than doubled, beating analysts’ estimates on higher premiums and growing Medicare enrollment.

Per-share earnings beat projections by an average of 14 percent for S&P 500 companies that have reported quarterly results since July 8, according to data compiled by Bloomberg. Analysts estimate profits for companies on the S&P 500 fell an average 33 percent in the second quarter and will decrease 20 percent from July through September.

The MSCI Asia Pacific Index advanced 1.4 percent after Australian Treasurer Wayne Swan said the global economy may have bottomed.

The S&P 500 yesterday climbed to its highest level since November, as a gauge of future economic growth topped projections and speculation grew that CIT Group Inc. will avoid bankruptcy. CIT announced an agreement with bondholders to provide the emergency financing late yesterday, keeping the 101- year-old commercial finance company out of bankruptcy.

Credit Suisse Strategy

Even so, CIT’s $3 billion financing pledge from bondholders may fail to shield the commercial lender from about $10 billion of debt maturing through next year, mounting loan defaults and a shrinking market share.

Credit Suisse Group AG switched its preference for government bonds in favor of stocks and raised its estimate for the S&P 500 by 14 percent to 1,050, citing improving economic indicators and earnings. Investors should increase holdings of global equities to “overweight” and reduce government bonds to “benchmark,” reversing a decision made in June, according to London-based global strategist Andrew Garthwaite.

Morrison soared 10 percent to 278.5 pence, the steepest intraday increase since February 2007. The smallest of the four main U.K. food retailers, said full-year results will be “ahead of its earlier expectations” after taking sales away from its larger competitors.

Actelion

Actelion advanced 3.9 percent to 59.75 Swiss francs. Switzerland’s largest biotechnology company said sales and cash earnings before interest and taxes in local currencies will rise 16 percent to 19 percent this year. Previously, Actelion had forecast a 12 percent to 15 percent increase in revenue and a 10 percent to 12 percent gain in earnings.

Nokia slid 2.9 percent to 9 euros. Morgan Stanley downgraded the shares to “underweight” from “overweight,” citing rising competition.

BASF SE, the world’s biggest chemical supplier, advanced 2.3 percent to 32.71 euros after boosting profit at its Indian subsidiary through cost cuts.

Norsk Hydro ASA rose 3.4 percent to 32.28 kroner. Europe’s third-largest aluminum producer was raised to “outperform” from “neutral” by Exane BNP Paribas.

Playtech Ltd., the U.K. developer of gambling software for PartyGaming Plc, plunged 22 percent to 354 pence after saying full-year trading would be below analyst estimates.

The William Hill Online joint venture with William Hill Plc took longer to start up than anticipated, Playtech said. William Hill, which said today that it is “comfortable” with the consensus of analysts’ estimates for the joint venture, lost 4.2 percent to 191.75 pence.

(Bloomberg)