U.S. Stocks Gain

U.S. stocks rallied, following gains in Asian and European markets, as the cheapest valuations in more than two decades lured investors back into equities.

Alcoa Inc., the largest U.S. aluminum producer, jumped 3 percent after the shares slid to their lowest price-to earnings ratio on record. Barrick Gold Corp. and Exxon Mobil Corp. advanced at least 2.8 percent. Morgan Stanley lost as much as 26 percent, leading financial shares to the only retreat among 10 industries, on concern Mitsubishi UFJ Financial Group Inc. needs more money to pay for its stake in the bank.

The Standard & Poor's 500 Index added 5.39 points, or 0.6 percent, to 854.31 at 11:23 a.m. in New York. The Dow Jones Industrial Average climbed 81.2 to 8,257.97. The Nasdaq Composite Index increased 23.48, or 1.6 percent, to 1,529.38. Hong Kong's benchmark index surged 14 percent, its best gain in 11 years, while Germany's climbed 4.7 percent. A 3.2 percent drop yesterday sent the S&P 500 to the lowest level since March 2003 and left it with a 42 percent decline for the year. The index opened today valued at 10.7 times estimated profit, the cheapest compared with the multiple using trailing profit since 1985.

Canadian stocks rebounded from their steepest drop in 21 years, led by commodity and financial shares. The Standard & Poor's/TSX Composite Index jumped 2.32 percent to 8,735.43 at 11:51 a.m. in Toronto. The S&P/TSX fell 8.1 percent yesterday, the most since ``Black Monday'' in October 1987.

Brazilian stocks gained the most in a week, halting a five-day slide, as commodity prices jumped, the currency rose and global markets rallied. The Bovespa index rose 1.2 percent to 29,778.01 at 11 a.m. New York time, its biggest jump since Oct. 20.

European stocks rose for the first time in six days as the Dow Jones Stoxx 600 Index traded near the cheapest relative to earnings in more than six years and BP Plc's profit topped analysts' estimates.

The Stoxx 600 advanced 0.5 percent to 196.06 at 3:01 p.m. in London. The index is down 23 percent in October, headed for its biggest monthly decline since the October 1987 crash. The measure closed yesterday valued at 7.9 times profit of the companies in the index, the lowest since at least January 2002.

National benchmark indexes climbed in 15 of the 17 western European markets that were open. The U.K.'s FTSE 100 added 2.2 percent as Aviva Plc gained. France's CAC 40 increased 1.1 percent. Germany's DAX surged 6.2 percent.

Japanese stocks rose the most in two weeks, breaking a four-day losing streak that erased almost a quarter of the Nikkei 225 Stock Average's value and sent the gauge to a 26-year low. The Nikkei 225, which lost 23 percent in the previous four days, gained 459.02, or 6.4 percent, to close at 7,621.92 in Tokyo. The gauge dropped to the lowest since October 1982 yesterday and fell as much as 2.4 percent today, sending it briefly below 7,000.

Australian S&P/ASX 200 Index fell 14.60 points, or 0.4 percent, to 3,794.60 at the close in Sydney, its lowest close since Nov. 1, 2004.

China's stocks rose, with the benchmark CSI 300 Index rebounding from its steepest drop in four months, as investors took advantage of the lowest valuations in at least two years. The CSI 300 Index, which tracks yuan-denominated stocks on the Shanghai and Shenzhen exchanges, rose 51.15, or 3.1 percent, to 1,705.82 at the close.

India's benchmark Sensitive Index rose, snapping a 20 percent, four-day decline, in a special one- hour trading session to mark Diwali, the Hindu festival of lights.The Bombay Stock Exchange's Sensitive Index, or Sensex, gained 498.52, or 5.9 percent, to 9,008.08 at the 7:15 p.m. close in Mumbai, the most since Oct. 13.

Russian stocks climbed for the first time in a week as investors looked for bargains worldwide, while Porsche SE's decision to boost its Volkswagen AG stake raised speculation the global equities selloff...

TradingEconomics.com, Bloomberg.com
10/28/2008 9:00:38 AM