Stocks jumped, sending the Standard & Poor’s 500 Index toward its biggest gain in two months, amid improving data on the American and Chinese economies and speculation of a larger effort to end Europe’s debt crisis.

The S&P 500 gained 2.1 percent, the most on a closing basis since Oct. 5, with 482 of its stocks advancing as of 2:12 p.m. in New York. The MSCI Emerging Markets Index jumped 2.2 percent for its biggest gain since June. The euro rebounded above $1.31 and Spanish 10-year bonds snapped an 11-day drop, while the rate on 10-year Treasury notes increased 15 basis points to 2.95 percent. Oil and copper advanced at least 2.8 percent.

U.S. equities started what is historically their best month with a rally after ADP Employer Services data showed companies added 93,000 jobs last month, the Federal Reserve said the economy gained strength across most of the nation and manufacturing in China expanded at the fastest pace in seven months. European Central Bank President Jean-Claude Trichet said investors are underestimating the policy makers’ determination to halt the region’s debt crisis and shore up the euro.

“We’re working our way back,” said David Joy, chief market strategist at Columbia Management in Boston, which oversees $347 billion. “The ADP number shows that we’re clearly going in the right direction,” he said. “The strength out of China shows that, even if there’s some tightening, they will be successful in engineering a soft landing.”

December Rallies

The S&P 500 erased three days of declines as Exxon Mobil Corp. and General Electric Co. paced gains that sent energy and industrial shares to the top performances among 10 groups, all of which rose.

The Dow Jones Industrial Average has rallied in December more than in any other month over the last century, according to Bespoke Investment Group. The 30-stock gauge rose 1.3 percent on average in the month during the past 100 years and gained 1.5 percent and 1.7 percent over the last 50 and 20 years, respectively, the Bespoke data show.

Today’s gains came after a report on private payrolls bolstered optimism before the government’s November employment data, which is forecast to show on Dec. 3 that 145,000 jobs were added last month. The jobs growth reported by ADP topped the median forecast of 70,000 in a Bloomberg survey of economists. The Institute for Supply Management’s gauge of manufacturing in the U.S. fell less than estimated to 56.6 for November.

IMF Speculation

Stocks and the euro extended gains after Reuters reported that an unidentified official said the U.S. may support enlarging a European financial rescue program by adding cash from the International Monetary Fund. The U.S. is not discussing extra IMF money for Europe, a U.S. official in Washington told Bloomberg News.

The Fed’s Beige Book survey showed the economy gained strength in 10 of 12 regions as manufacturing expanded and retailers anticipated a stronger holiday shopping season. Five Fed banks, including Boston and San Francisco, said the economy grew “at a slight to modest” rate, while five others, including New York and Chicago, reported a “somewhat stronger pace of economic activity.” Conditions were reported as “mixed” in the Philadelphia and St. Louis regions.

The Stoxx Europe 600 Index rallied 2 percent, the most in three months. Spain’s IBEX 35 led gains in national benchmark gauges, surging 4.4 percent for its biggest gain since May. Banco Santander SA, the nation’s largest lender and Banco Bilbao Vizcaya Argentaria SA jumped more than 7 percent.

Asian Stocks

The MSCI Asia Pacific Index rose 0.9 percent. China’s Purchasing Managers’ Index climbed to 55.2 last month, beating the 54.8 median estimate of 14 economists surveyed by Bloomberg News. South Korean exports rose 24.6 percent from a year earlier after gaining a revised 27.6 percent in October.

The euro appreciated against 13 of 16 major counterparts, climbing 1.5 percent to 110.32 yen, snapping a three-day decline. The Swiss franc slipped against 14 of its 16 most- traded counterparts, weakening 0.7 percent versus the euro. The Dollar Index, which tracks the U.S. currency against six trading partners, declined for the first time in four days, falling 0.4 percent to 80.850.

There’s “a calm of sorts returned to financial markets,” Peter Frank, a currency strategist at Societe Generale SA in London, wrote in a report today. “Both equity and commodity prices were resilient to the ongoing European Union sovereign crisis thanks to another bout of solid manufacturing results for China.”

The extra yield investors demand to hold Spanish 10-year bonds instead of benchmark German bunds tumbled 34 basis points to 249 basis points. Irish 10-year yields declined 31 basis points to 9.13 percent.

Portuguese Bond Auction

Portuguese bonds rose, sending the 10-year yield 21 basis points lower to 6.86 percent, as the government sold 500 million euros ($655 million) of 12-month bills today. The auction attracted bids for 2.5 times the amount offered, compared with a bid-to-cover ratio of 1.8 in November.

S&P said late yesterday it may cut Portugal’s credit rating on concern the nation may have to seek a bailout. Yields on debt from Italy and Spain climbed to euro-era records relative to bunds this week, while the spread on higher-rated Belgian bonds over bunds increased yesterday to the most since at least 1993.

The ECB bought Irish government bonds today, according to three traders with knowledge of the transactions. The central bank also purchased Portuguese debt, said two people, who asked not to be identified because the deals are confidential. An ECB spokesman in Frankfurt declined to comment.

Default Swaps

The cost of insuring against a default on European corporate debt decreased, with the Markit iTraxx Crossover Index of credit-default swaps on 50 mostly junk-rated companies declining 20 basis points to 505.31, according to Markit Group Ltd. The index surged to a two-month high yesterday.

Default swaps insuring Belgian bonds lost eight basis points to 197 from a record 204.9 yesterday, contracts on Ireland fell 48 basis points to 558, according to data provider CMA, while swaps on Spain and Portugal also slid. Swaps on all the nations were at record highs yesterday.

The S&P GSCI Index of 24 commodities gained 2.8 percent, with oil jumping 2.8 percent to $86.44 a barrel and copper climbing 3 percent to $3.9405 a pound in New York.

Source: Bloomberg.com

Similar Posts:

• Stocks, Euro Rise Amid Greece Optimism
• Asian Stocks Drop as Euro Approaches Two-Year Low
• Asian Stocks Rise to One-Week High on Recovery; Bond Risk Falls
• U.S. Stocks, Oil, Euro Gain Ground
• Oil Heading for Biggest Quarterly Drop Since 2008