European Shares Rally Most in 10 Weeks Before Fed Rate Decision

---

European stocks rallied the most since Oct. 5 as investors bet that the U.S. economy is strong enough to cope with the Federal Reserve’s expected first interest rate increase in almost a decade.

Tullow Oil Plc helped push energy companies to the best performance of the 19 industry groups on the Stoxx Europe 600 Index after the successful exploration of a well increased the potential size of oil resources in Kenya. Total SA and Royal Dutch Shell Plc added at least 3.2 percent as oil prices jumped. Automakers climbed after data from the European Automobile Manufacturers’ Association showed car sales in the region increased 14 percent in November. Glencore Plc rose 3 percent after JPMorgan Chase & Co. recommended buying the shares, citing its “credible” strategy update.

The Stoxx Europe 600 Index advanced 2.9 percent to 359.58 at the close of trading, snapping a five-day losing streak. Germany’s DAX Index and France’s CAC 40 were among the biggest gainers, rising at least 3.1 percent. The Stoxx 600 is still down 6.7 percent this month, on course for its worst December since 2002 amid a rout in commodities, concern about U.S. monetary policy tightening and disappointment over the extent of European stimulus.

Traders are now pricing in a 78 percent chance that U.S. policy makers will increase borrowing costs tomorrow.

Declines in miners and energy companies dragged European stocks lower yesterday as investors turned away from riskier assets amid lingering fears about global growth. A high-yield fund liquidating its portfolio also contributed to bearish sentiment across markets.

Among stocks moving on corporate news today, Syngenta AG advanced 2.2 percent as China National Chemical Corp. was said to be weighing a new bid after its chairman met with officials from the world’s largest chemical maker last week.

Volkswagen AG added 1.7 percent after it posted a 4.2 percent increase in November sales, even as it suffered its biggest decline in monthly European market share since September’s emissions scandal.

Sanofi rose 5.3 percent after saying it is in exclusive talks to swap assets with Germany’s Boehringer Ingelheim GmbH in a 22.8 billion-euro ($25 billion) transaction. Metro AG gained 4.4 percent after reporting fourth-quarter profit that beat analysts’ estimates and forecasting further improvements.

Abengoa SA jumped in the final minutes of trading to close 11 percent higher after Reuters reported that the company’s creditors may provide an additional 100 million euros in January.

Aveva Group Plc tumbled 28 percent after saying it has ended talks for a merger with Schneider Electric SE.

Source : Bloomberg

Oil Extend Gain From Six-Year Low as U.S. May Lift Export Ban

---

Crude climbed a second day after tumbling to a six-year low amid signs the U.S. may allow unfettered exports for the first time in 40 years.

West Texas Intermediate rose as much as 4.3 percent, adding to Monday’s 1.9 percent gain amid a broader rally of U.S. and European stocks. House Democrats are open to lifting the ban on American crude exports if they get adequate concessions in exchange, a Democratic leadership aide said Monday. U.S. crude supplies probably fell last week, according to a Bloomberg survey before government data on Wednesday.

Oil is trading close to levels last seen during the global financial crisis this week after the Organization of Petroleum Exporting Countries effectively abandoned output limits in an effort to defend market share. Repealing the restrictions on shipping U.S. crude overseas could open new markets, buoying the price of domestic crude grades.

WTI for January delivery rose $1.19, or 3.3 percent, to $37.50 a barrel at 1:25 p.m. on the New York Mercantile Exchange. The U.S. benchmark slid below $35 a barrel Monday for the first time since February 2009. The volume of all futures traded was 46 percent above the 100-day average. The gap between WTI and Brent -- the North Sea grade used globally -- shrank to as little as $1.28 a barrel, the narrowest gap since January.

Brent for January settlement, which expires Wednesday, rose $1.03, or 2.7 percent, to $38.95 a barrel on the London-based ICE Futures Europe exchange. The more-active February contract increased $1.09 to $39.25.

Source: Bloomberg

Dollar Climbs Before Feds Interest-Rate Decision as Bonds Fall

---

The dollar climbed versus the euro and yen as bond yields rose before the Federal Reserve’s interest-rate decision Wednesday.

The greenback gained as U.S. two-year yields reached the highest level since May 2010 after a report showed core inflation rose in November for a third month. A measure of price swings in the foreign-exchange market accelerated to close to the most this month.

With futures contracts showing a 78 percent likelihood that the U.S. will raise its benchmark from near zero on Wednesday, traders are looking past the first increase and contemplating a landscape of relatively low borrowing costs for years to come. A gauge of the dollar has surged 8 percent in the past year in anticipation of the Fed raising rates in contrast with counterparts in Europe and Japan who are carrying out unprecedented stimulus.

The dollar added 0.7 percent to $1.0913 per euro as of 2:02 p.m. New York time, after dropping as much as 0.6 percent. The currency gained 0.6 percent to 121.77 yen.

Source : Bloomberg

U.S. Stocks Rally With Crude Oil for Second Day as Fed Gathers

---

The Standard & Poor’s 500 Index capped its first back-to-back gains in more than a month as energy companies led a rally with crude oil, while Federal Reserve officials started a two-day meeting at which they are widely expected raise interest rates for the first time since 2006.

Chevron Corp. and Exxon Mobil Corp. gained more than 3.8 percent, taking their two-day advances to more than 6.8 percent. Financial shares increased as concern over turmoil in high-yield bonds abated, and banks rallied the most in seven weeks on the eve of what most believe will be the end of the Fed’s zero interest rate policy.

The S&P 500 climbed 1.1 percent to 2,043.41 at 4 p.m. in New York, marking its first consecutive advances since Nov. 3.

Prospects for the first U.S. rate increase since 2006 and a deepening oil rout had sparked a selloff in riskier assets in December. The S&P 500’s 1.8 percent decline is bucking the historical trend of gains in the final month, with the equity gauge is on track for its worst December in 13 years and the biggest annual drop since 2008. It has slipped 4.1 percent since a May record.

Source: Bloomberg

U.S. Stocks Advance, Tracking Oil for Second Day as Fed Gathers

---

U.S. stocks rose for a second day as energy companies rallied with crude oil, while Federal Reserve officials start a two-day meeting at which they are widely expected raise rates for the first time since 2006.

Chevron Corp. and Exxon Mobil Corp. gained more than 3.2 percent, taking their two-day advances to more than 6 percent. Financial shares increased as concern over turmoil in high-yield bonds abated, with asset managers Affiliated Managers Group Inc. and Franklin Resources Inc. rebounding at least 1.2 percent. 3M Co. fell 4.8 percent, weighing on industrials after cutting its profit forecast.

The Standard & Poor’s 500 Index climbed 0.9 percent to 2,040.41 at 11:44 a.m. in New York, with the gauge headed toward its first back-to-back gains since Nov. 3. The Dow Jones Industrial Average increased 165.99 points, or 1 percent, to 17,534.49. The Nasdaq Composite Index rallied 0.8 percent. West Texas Intermediate crude futures rose 2.2 percent.

Another gauge of investor nervousness, the Chicago Board Options Exchange Volatility Index, fell 6.3 percent Tuesday to 21.31, extending its two-day decline to 13 percent. The measure of market turbulence known as the VIX surged 65 percent last week, the most since a record monthly jump in August.

All of the S&P 500’s 10 main industries climbed today, led by energy’s 2.6 percent jump. Financial and health-care companies added more than 1.1 percent.

Ensco Plc rose 7.4 percent to lead the energy group, while Baker Hughes Inc. and Transocean Ltd. added more than 4.2 percent. Exxon Mobil had its strongest gain in more than three months.

Banks surged, rising along with Treasury yields amid speculation that higher interest rates will lift profits. Comerica Inc. rallied 4.3 percent, while Regions Financial Corp. and Huntington Bancshares Inc. gained at least 3.3 percent. Among other financial companies, Morgan Stanley and Goldman Sachs Group Inc. increased more than 2.8 percent

Source: Bloomberg