Deutsche Bank AG and Citigroup Inc. rose more than 5 percent before U.S. Treasury Secretary Timothy Geithner unveils an expansion of the $700 billion rescue of the financial system. Daimler AG surged 6.1 percent after the automaker said it will sell a 9.1 percent stake to Abu Dhabi’s Aabar Investments PJSC. Petro-Canada jumped 18 percent in Germany after agreeing to be bought by Suncor Energy Inc. to create the biggest Canadian energy company.
“We think the outcome of Timothy Geithner’s plans will encourage the markets further on and we will have a lot of good performances in the next few weeks,” said Herbert Perus, head of global equities at Raiffeisen Capital Management in Vienna, which has the equivalent of $62 billion. “There are a lot of opportunities in the market right now.”
The MSCI World Index climbed for the ninth time in 10 days, increasing 1.2 percent at 9:33 a.m. in London. The gauge of 23 developed nations has added 16 percent since March 9 as Citigroup, Bank of America Corp. and JPMorgan Chase & Co. said they made money in the first two months of 2009 and the Federal Reserve said it would buy $300 billion of government bonds to combat the worst financial crisis since the Great Depression.
Geithner’s Plan
Futures on the Standard & Poor’s 500 Index gained 2.8 percent. Geithner is expected to introduce the Public Private Investment Program today, expanding the bailout of the financial system by relying on enticing private investors to buy the troubled assets clogging banks’ balance sheets.
The dollar weakened and the yen fell to a five-month low against the euro on speculation additional U.S. steps to help banks dispose of toxic assets will spur demand for higher- yielding currencies. The gains in stocks damped demand for government securities, pushing U.S. Treasuries down for a third day. U.S. bonds earlier had erased losses after a Chinese official said the nation will keep buying the securities as they are an “important element” of the country’s reserves.
Europe’s Dow Jones Stoxx 600 Index gained 1.4 percent. Barclays Plc climbed on speculation Hellman & Friedman LLC will bid for its iShares unit along with a group of private equity firms. The regional gauge has rebounded 11 percent from a 12- year low March 9, trimming its 2009 retreat to 12 percent.
The MSCI Asia Pacific Index posted its biggest rally this year, adding 3.9 percent today.
Bull Market
Mark Mobius said the next “bull-market” rally has begun and there are bargains in every emerging market following the record slump in stocks. The executive chairman of Templeton Asset Management Ltd. said investors “have to be careful not to miss the opportunity.”
Deutsche Bank, Germany’s largest bank, rose 5.7 percent to 29.92 euros. Mitsubishi UFJ Financial Group Inc., Japan’s biggest publicly traded bank, advanced 4.7 percent to 512 yen.
Geithner has crafted an approach using up to $100 billion of bailout money to spur investment funds to purchase -- and banks to unload -- the illiquid securities and loans that have caused credit to dry up. The Treasury, Fed and the Federal Deposit Insurance Corp. will all play a role alongside private investors in aiming to buy between $500 billion and $1 trillion of troubled assets.
The announcement is a major test for Geithner, whose first speech on the financial rescue Feb. 10 offered so few details that it triggered a 4.9 percent drop in the S&P 500. Adding to the pressure on the administration is a wave of populist anger over the rescue thus far, following the revelation employees of American International Group Inc. got at least $165 million in bonuses after the insurer received a $173 billion bailout.
‘The Rhetoric’
“The expectations level on Geithner to deliver is heightened,” said Manus Cranny, a London-based market analyst at MF Global. “We need to see the rhetoric carried through,” he said in a Bloomberg Television interview.
Citigroup surged 19 percent to $3.12 in pre-market New York trading, while Bank of America jumped 16 percent to $7.16. The S&P 500 Financials Index of banks, brokerages and insurers has rallied as much as 54 percent from a 17-year low on March 6.
While bank stocks have climbed, bonds of the companies yield 8.55 percentage points more than Treasuries, about the widest in 13 years, according to Merrill Lynch & Co. indexes. The gap between yields of financial institutions’ bonds and Treasuries widened even as their shares jumped, suggesting this month’s record rally is in jeopardy.
Barclays Advances
Barclays added 9.9 percent to 115.4 pence. The U.K.’s third-largest bank may sell its iShares unit in a transaction valued at as much as $5 billion, a person with knowledge of the situation said. Barclays has set a deadline for offers for the end of this week, said the person.
A New York-based Hellman & Friedman spokesman declined to comment on the possible bid. Nicola Hankey, a Barclays’ spokeswoman, declined to comment when contacted by Bloomberg News.
Daimler, the second-largest maker of luxury cars, climbed 6.1 percent to 22.65 euros. Aabar will buy 96.4 million new Daimler shares at 20.27 euros apiece. The 1.95 billion-euro ($2.67 billion) investment buttresses Daimler’s resources as the worst auto-industry crisis in decades forces the maker of Mercedes-Benz cars and trucks to cut hours for 54,000 German assembly-line workers and close two plants in North America.
European automobile shares also rose after Goldman Sachs Group Inc. boosted its recommendation on the industry to “attractive,” saying now is the “best buying opportunity in 10 years.” Renault SA gained 3.3 percent to 15.50 euros.
Petro-Canada rallied 18 percent to C$34.94 in German trading after Suncor Energy agreed to buy it for about C$17 billion ($14 billion) in an all-share transaction to diversify and gain assets in the North Sea, North Africa and Latin America. Suncor shares slid 4.7 percent to C$29.44.
To contact the reporter on this story: Adam Haigh in London at ahaigh1@bloomberg.net
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