U.S. stocks rise on Greece optimism as commodities erase gains

European Shares

Three stocks rose for every one that fell in the Stoxx 600. CGGVeritas, the world’s largest seismic surveyor of oilfields, and ArcelorMittal, the biggest steelmaker, rose more than 4 percent as analysts upgraded the shares. Greggs Plc, a U.K. baker, jumped 8.1 percent as Chancellor of the Exchequer George Osborne reversed a plan to add value-added tax to some snacks.

Bankia SA led a decline in Spanish stocks, sliding 16 percent. Spain backtracked on a plan to use government debt instead of cash to bail out Bankia, as Prime Minister Mariano Rajoy struggles to shore up the nation’s lenders without overburdening public finances.

Bankia Bailout

An Economy Ministry spokesman said yesterday that the government was considering using an injection of treasury debt instead of cash to recapitalize BFA-Bankia, as laid out in legislation approved in February. Spanish bond yields rose and investors criticized the idea, which the spokesman, speaking anonymously under ministry policy, said today had become a “marginal” option for the 19 billion-euro ($24 billion) rescue.

Spain’s 10-year yield decreased three basis points to 6.45 percent today after surging 17 points yesterday. The nation’s two-year yield increased 16 basis points to 4.63 percent today, rising for the third straight day. Spain’s sovereign credit rating today was cut by Egan-Jones Ratings Co. to B from BB- on the country’s deteriorating economic outlook.

Volatility on Japanese bonds was the highest in developed markets today, according to measures of 10-year debt, the two- and 10-year yield spread and credit-default swaps. The yield on the 10-year security dropped 3 basis points to 0.85 percent.

‘Ultimate Arbiter’

The euro weakened against 14 of 16 major peers, losing 0.7 percent versus the Mexican peso and 0.6 percent against the South African rand. Stephen Roach, a professor at Yale University and former non-executive chairman for Morgan Stanley in Asia, said euro-area authorities will do all they can to prevent a breakup of the 17-nation currency bloc.

“While you could make the case that Greece should leave because it gets its currency flexibility back, the ultimate arbiter will be political considerations,” Roach said in an interview with Tom Keene on Bloomberg Radio’s “Bloomberg Surveillance” today. “On that basis, Greece will stay in and European leaders will do everything in their power to keep the monetary union intact.”

The S&P GSCI gauge of 24 commodities decreased 0.5 percent, reversing a gain of as much as 0.9 percent. Crude in New York slipped 10 cents to $90.76 a barrel after climbing as much as 1.5 percent. Natural gas fell 5.4 percent, bringing its decline since May 23 to more than 11 percent, on forecasts for cooler weather that would curb demand for fuel at power plants.

Emerging-market stocks gained for a fourth day. The Hang Seng China Enterprises Index of Chinese companies listed in Hong Kong climbed 2.2 percent. Taiwan’s Taiex jumped 2.9 percent and South Korea’s Kospi Index added 1.4 percent. Russia’s Micex Index advanced 2.4 percent.

Bloomberg News

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