U.S. stocks rise as China eases restrictions on bank investing

U.S. stocks were little changed, after a two-day decline in the Standard & Poor’s 500 Index, as China eased restrictions on investing in banks and investors watched developments on budget negotiations in Washington.

Plains Exploration & Production Co. and McMoRan Exploration Co. surged at least 25 percent as Freeport-McMoRan Copper & Gold Inc. agreed to acquire them for about $9 billion. Citigroup Inc. gained 4.4 percent after announcing it will take a pretax charge of about $1 billion as part of a plan to eliminate more than 11,000 jobs. Apple Inc. dropped 3.3 percent, leading technology shares lower.

The S&P 500 fell less than 0.1 percent to 1,406.93 at 10:10 a.m. New York time. The Dow Jones Industrial Average added 36.52 points, or 0.3 percent, to 12,988.30. Trading in S&P 500 companies was 32 percent above the 30-day average at this time of day, according to data compiled by Bloomberg.

“The market is looking for any semblance of economic growth,” John Augustine, who helps manage $26.1 billion as chief market strategist at Cincinnati-based Fifth Third Bancorp, said in a phone interview. “Investors are weighing the growth prospects between China, Europe. U.S. Stocks are going to ebb and flow from day to day on those prospects. As Chinese leaders give support not only for relaxed standards in the financial sector but for overall economic growth next year, stocks are going to react to that.”

Chinese Regulators

China’s regulators abolished a rule limiting insurers’ investments in commercial banks. Companies in the U.S. added fewer workers in November than a month earlier after superstorm Sandy battered the East Coast and temporarily shuttered some businesses, according to ADP Research Institute.

The Institute for Supply Management’s index of U.S. non- manufacturing businesses, which covers about 90 percent of the economy, rose to 54.7 in November from the prior month’s 54.2, the Tempe, Arizona-based group said today. Orders for equipment such as computers and electrical gear climbed in October by the most in eight months, indicating U.S. manufacturing is stabilizing heading into the looming fiscal cliff.

U.S. stocks fell yesterday, sending the S&P 500 lower for a second straight day, after President Barack Obama held his ground about raising tax rates for the highest-income Americans.

Plains Exploration jumped 25 percent to $45.08 and McMoRan Exploration rose 78 percent to $15.04. Freeport slumped 13 percent to $33.18. Freeport will pay about $50 a share in cash and stock for Plains, representing a takeover premium of about 39 percent based on the companies’ closing share prices yesterday, Phoenix-based Freeport said today in a statement. Holders of each McMoRan share will get $14.75 in cash and 1.15 units of a royalty trust.

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