Stocks in Europe and Asia Advance

Stocks rose in Europe and Asia after American officials suggested they won’t wipe out shareholders by nationalizing banks, Bloomberg 2/25/2009 5:39:31 AM

Deutsche Bank AG and UBS AG surged more than 7 percent as Federal Reserve Chairman Ben S. Bernanke told lawmakers the government would use supervision instead of shareholder control to guide banks. Deutsche Boerse AG added 5.7 percent after saying costs in 2009 will be lower than it had anticipated.

The MSCI World Index rose for a second day, increasing 0.6 percent to 772.68 at 1:13 p.m. in London. The gauge of 23 developed countries has still lost 16 percent this year as companies from Anglo American Plc to Cie. de Saint-Gobain SA indicated the recession is worsening and U.S. Treasury Secretary Timothy Geithner failed to convince investors that his plan to rescue U.S. banks will work.

European stock indexes gave up some of their gains after Ukraine had its rating downgraded two levels to CCC+, seven levels below investment grade, by S&P. The cut comes a day after Latvia was downgraded to junk.

Contracts to protect Ukraine’s government bonds against default cost 59.5 percent upfront and 5 percent a year, according to CMA Datavision prices for credit-default swaps in London. That means it costs $5.95 million in advance and $500,000 a year to protect $10 million of bonds for five years. The cost is higher than any other government debt worldwide, Bloomberg data show.

Europe’s Dow Jones Stoxx 600 Index rebounded from a six-year low, gaining 0.8 percent as Henkel AG and Rhodia SA reported profit that beat analysts’ estimates. The MSCI Asia Pacific Index advanced 1.7 percent.