October 14th, 2011

Global stocks surged, extending the biggest weekly rally since July 2009, as the Group of 20 began talks to tame Europe’s debt crisis and U.S. retail sales and Google Inc.’s results beat estimates. Commodities rose and the euro headed for the best weekly gain since January.

The Standard & Poor’s 500 Index climbed 0.8 percent at 10:21 a.m. in New York as Google Inc. jumped 6.3 percent. The Dow Jones Industrial Average extended a third straight weekly advance, its longest streak since April. Copper added as much as 3.8 percent as the S&P GSCI Index of 24 commodities climbed 2.3 percent. Ten-year Treasury note yields rose five basis points to 2.24 percent. The euro was at $1.3880, up 3.8 percent this week.

The MSCI All-Country World Index extended its weekly advance to 5.2 percent as elements of the European rescue plan emerged with finance officials from the G-20 beginning talks in Paris. The bigger-than-forecast 1.1 percent increase in U.S. retail sales last month eased concern that slumping consumer confidence will hurt spending, while Google’s earnings showed growing demand for online advertising.

“The economy seems to be re-accelerating as the various threats to growth moderate,” David Goerz, the San Francisco- based chief investment officer at Highmark Capital Management Inc., which oversees $17.2 billion, said in an e- mail.

Debt Turmoil

Policy makers are discussing an expansion of the IMF’s role as part of a global G-20 agreement next month in Cannes, France, according to three officials, who declined to be identified because the discussions are not public. Talks are in preliminary stages as potential contributors wait to see what measures Europeans take to end the debt turmoil at an Oct. 23 summit, they said.

The S&P 500 was poised to complete its first back-to-back weekly gain since July. Apple Inc. rose 2 percent as analysts predicted it will sell as many as 4 million new iPhone 4S devices this weekend as customers around the world lined up.

The better-than-forecast growth in retail sales helped the Citigroup Econonomic Surprise Index for the U.S. turn positive for the first time since April 29, the day the S&P 500 peaked at an almost three-year high. The gauge measures the degree to which data is beating or trailing economists’ estimates.

U.S. equities maintained gains even after the Thomson Reuters/University of Michigan preliminary October index of consumer sentiment fell to 57.5 from 59.4 a month earlier, the group reported today.

The Stoxx Europe 600 Index headed for a third straight weekly gain, its longest stretch of weekly advances since April. Syngenta AG, the world’s biggest maker of agricultural chemicals, jumped 2.2 percent after reporting third-quarter sales that beat estimates. SAP AG gained 2.7 percent after the largest maker of business-management software said earnings and sales rose in the third quarter on rising demand for its services. SAP also reiterated its full-year forecast.

European Stocks

All 19 industry groups in the Stoxx 600 advanced. Banks rose as a group even after Fitch Ratings put more than a dozen lenders on watch negative as part of a global review. Unicredit SpA of Italy and Switzerland’s Julius Baer Group Ltd. rose more than 5 percent to lead gains, while BNP Paribas SA dropped 1.9 percent and Societe Generale SA slipped 0.6 percent.

Italy’s FTSE MIB Index rallied 3.1 percent to lead gains among European nations and the 10-year bond yield was little changed 5.83 percent. Prime Minister Silvio Berlusconi won a parliamentary confidence vote today to avert the collapse of his government, giving him more time to try and steer Italy out of Europe’s debt crisis.

Spain’s 10-year note yield climbed five basis points to 5.25 percent after. The extra yield investors demand to hold French 10-year bonds instead of benchmark German bunds widened eight basis points to 92 basis points, the most since the euro started in 1999. The Belgian two-year note yield increased nine basis points.

Default Swaps

The cost of insuring European sovereign debt rose after S&P said it was downgrading Spain because of slowing growth and concern rising defaults will undermine banks. The Markit iTraxx SovX Western Europe Index of credit-default swaps linked to 15 governments gained 1.4 basis points to 335.25.

Copper rallied as much as 3.8 percent to $3.4315 a pound in New York, poised for a second weekly gain. Stockpiles in London Metal Exchange warehouses decreased for an eighth day to the lowest level since April 13. Copper imports by China climbed for a fourth month to the highest level in 16 months in September, according to customs data.

Oil for November delivery climbed as much as 3.6 percent to $87.28 a barrel on the New York Mercantile Exchange, reversing an early decline.

Emerging Markets

The MSCI Emerging Markets Index rose 0.5 percent, heading for its eighth consecutive gain, the longest streak since July 2010.

The Hang Seng China Enterprises Index of Chinese shares traded in Hong Kong fell 2.2 percent. The National Bureau of Statistics said consumer prices rose 6.1 percent in September from a year earlier, the fourth consecutive month of inflation above 6 percent. China’s money supply grew at the slowest pace in almost a decade as inflation stayed above the government’s target, highlighting the risk that efforts to tame prices will trigger a slowdown.

The Micex Index jumped 2.9 percent in Moscow as oil rose. The ISE National 100 Index (XU100) rose 1.4 percent in Istanbul and the Bombay Stock Exchange’s Sensitive Index, or Sensex, gained 1.2 percent.

The euro rose to 106.82 yen. The 17-nation currency’s 3.7 percent five-day gain versus the greenback left it on course for the biggest weekly advance since January. The Dollar Index, which tracks the U.S. currency against those of six trading partners, fell 0.6 percent.

- Daniel Tilles in London and Michael P. Regan in New York at Bloomberg.