Stocks, Oil Gain as Dollar Weakens Before Fed Sets Policy

Dec. 16 (Bloomberg) -- U.S. and European stocks rose on speculation the Federal Reserve will hold its benchmark interest rate at a record low to sustain the global economic recovery. Oil and metals climbed as the dollar fell.

The Standard & Poor’s 500 Index added 0.4 percent to 1,112.83 at 9:43 a.m. in New York, near its highest level in 14 months. The Dow Jones Stoxx 600 Index of European equities gained for a fifth day, climbing 0.9 percent. Russia’s Micex Index jumped 3.6 percent, the steepest increase among world equity gauges. Oil rose for a second day, exceeding $71 a barrel in New York, as copper and gold also advanced.

Fed Chairman Ben S. Bernanke and his Federal Open Market Committee colleagues, meeting in Washington today, may say U.S. economic growth is accelerating while repeating a pledge to keep the benchmark interest rate near zero for an extended period. Services and manufacturing grew at the fastest pace in more than two years in Europe. Confidence in the world economy held near a record high, according to a survey of Bloomberg users.

“The Fed is likely to hint that interest rates will remain at current low levels for the next few quarters,” said Jesper Dannesboe, a commodity strategist at Societe Generale SA in London. “Another year of low interest rates is good for all growth-sensitive assets.”

U.K. Homebuilders Gain

The MSCI World Index of 23 developed nations’ stocks advanced 0.3 percent. U.K. homebuilders rallied in London after Citigroup Inc. recommended buying shares of Barratt Developments Plc, Taylor Wimpey Plc and Redrow Plc. Japanese stocks climbed after the Nikkei daily said banks will be given 10 to 20 years to meet tougher capital rules. Mizuho Financial Group Inc., Japan’s third-biggest lender, surged 15 percent.

The gain in U.S. futures indicated the S&P 500 may pare yesterday’s 0.6 percent decline. Housing starts rose 8.9 percent to an annual rate of 574,000, the Commerce Department said, and building permits climbed to the highest level in a year. The consumer price index increased 0.4 percent last Month from October, figures from the Labor Department showed. The so-called core index that excludes food and energy was unexpectedly unchanged, the first month without an increase since December 2008.

The Bloomberg Professional Global Confidence Index fell to 58.9 this month from 60.3 in November. The series that began two years ago reached its highest in October with a reading of 61.7. The index exceeded 50 for a fifth month, which means there were more optimists than pessimists.

The MSCI Emerging Markets Index slipped 0.1 percent as Chinese banks declined on a regulatory official’s warning that bad loans pose a risk.

Russia Rallies

Russia’s Micex index climbed for a third day, its longest winning streak in two months, as rising oil and metals boosted the earnings outlook for commodity companies. OAO Tatneft advanced after the oil producer’s profit jumped 55 percent in the first nine months of the year.

Oil and industrial metals gained on optimism the recovery will boost raw material demand. Copper for delivery in three months rose 1.3 percent on the London Metal Exchange. Crude for January delivery gained as much as 1.3 percent to $71.59 a barrel in New York. Gold for immediate delivery rose 0.5 percent in London, to $1,130.60 an ounce.

Greece’s bonds snapped two days of declines, with the 10- year yield falling 24 basis points to 5.49 percent after the country sold 2 billion euros ($2.9 billion) of floating-rates privately to banks yesterday as it sought to plug a budget deficit that’s the highest in the European Union.

U.S. Treasuries were little changed with the 10-year note yield unchanged 3.58 percent. The German bund yield slipped two basis points to 3.25 percent.

The Australian dollar fell against all 16 most-traded currencies tracked by Bloomberg after central bank deputy Governor Ric Battellino said monetary policy is back in “the normal range,” damping expectations for higher interest rates.

The pound rose, strengthening 0.6 percent compared with the dollar, after a government report showed U.K. jobless claims unexpectedly fell in November.