Stocks advance on ECB expectations; crops lead commodities

July 30 (Bloomberg) -- Stocks rose, sending U.S. and European benchmark indexes to almost four-month highs, and Spanish bonds rallied on speculation policy makers will take action to ease Europe’s debt crisis. Corn jumped to a record as an American drought persisted.

The Stoxx Europe 600 Index advanced 1.3 percent and the Standard & Poor’s 500 Index climbed 0.1 percent at 10:09 a.m. in New York, with both at the highest levels since early April. The yield on the Italian 10-year bond rose five basis points after the nation sold debt, while the similar-maturity Spanish yield dropped for the fourth day. The euro depreciated 0.5 percent to $1.2261, snapping a three-day gain. Corn, wheat and soybean futures rallied more than 1.5 percent.

European Central Bank President Mario Draghi meets with U.S. Treasury Secretary Timothy Geithner in Frankfurt today after leaders in Berlin, Paris and Rome backed him by saying they will do what’s needed to protect the 17-nation euro. Spain’s economy shrank 0.4 percent in the second quarter, the National Statistics Institute in Madrid said today. The Federal Reserve will start a two-day meeting tomorrow.

“Given the sheer scale of the structural adjustment that is still needed in Europe and accelerating capital flight from peripheral countries to the core, it will take extraordinary efforts from the ECB to implement lasting solutions,” said Kaha Kiknavelidze, London-based managing partner at Rioni Capital Partners LLP, an emerging-markets hedge fund that manages $30 million.

Narrower Loss

The Stoxx 600 has gained for eight straight weeks, its longest rally in more than six years. Air France-KLM Group surged as much as 15 percent as Europe’s biggest airline reported a narrower-than-estimated loss. JC Decaux SA sank 9 percent after the French billboard company said so-called organic revenue was lower than forecast in the second quarter.

The S&P 500 rallied 3.6 percent over the previous two sessions, its biggest back-to-back gain since Dec. 1. Among U.S. shares today, The Shaw Group Inc. climbed 58 percent after Chicago Bridge & Iron Co. agreed to buy the company for about $3 billion to expand its portfolio of engineering and construction projects across the energy industry.

Fed policy makers meet this week before a jobs report to decide whether additional stimulus is needed to combat a slowdown in the world’s biggest economy. Labor Department data on Aug. 3 is forecast by economists to show U.S. employers added 100,000 jobs to payrolls in July and the unemployment rate held at 8.2 percent. Other data may show manufacturing stagnated in July and consumer confidence fell for a fifth month.

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