U.S. stocks rise with metals on China

Stocks rose for a fourth day and metals rallied as economic data in China beat estimates, and investors weighed prospects for a U.S. budget deal. Italy’s stocks and bonds slid as the prime minister planned to resign.

The Standard & Poor’s 500 Index increased less than 0.1 percent to 1,418.56 as of 4 p.m. and the MSCI All-Country World Index added 0.2 percent, erasing an earlier 0.2 percent drop. Italy’s FTSE MIB sank the most in a month and the government’s 10-year bond yield had the biggest increase since August. Lead, nickel, zinc, aluminum and copper rallied at least 1.2 percent.

China’s factory output jumped 10.1 percent in November and retail sales rose 14.9 percent, reports showed yesterday. Italian Prime Minister Mario Monti said that while he lost support and will resign, he’s confident elections will result in a “highly responsible, EU-oriented government.” U.S. lawmakers from both parties are leaving rhetorical room for a split-the- difference budget agreement to avoid the fiscal cliff.

“China hit that trough and is starting to see an acceleration of growth,” Tom Wirth, who helps manage $1.6 billion as senior investment officer for Chemung Canal Trust Co., in Elmira, New York, said in a phone interview. “As far as our market goes, I don’t think there’s anything out there right now. It’s waiting on the politicians.”

Leaders in the U.S. need to agree on a budget to prevent more than $600 billion of automatic tax increases and spending cuts from coming into effect next year. U.S. President Barack Obama and House Speaker John Boehner met one-on-one yesterday at the White House. Representatives for the two said in statements afterward that “the lines of communication remain open.”

Market Leaders

Hewlett-Packard Co., Cisco Systems Inc. and Microsoft Corp. helped lead gains in the Dow Jones Industrial Average, while Home Depot Inc. and Verizon Communications Inc. were among the biggest declines. McDonald’s Corp., the largest restaurant chain, advanced after November sales rose 2.4 percent globally.

American International Group Inc. slid after the insurer said superstorm Sandy will cost the company about $1.3 billion. Priceline.com Inc. retreated after the online travel service was downgraded to hold from buy at Deutsche Bank AG.

Companies in the S&P 500 are paying less in interest on debt than any time in at least a decade, leaving investors more dependent on economic growth and corporate spending for equity gains in 2013.

Constituents of the benchmark gauge for American stocks such as Exxon Mobil Corp. and Walt Disney Co. cut interest expenses to 2.39 percent of sales in the 12 months ended Sept. 30 on average, the lowest level since at least 2002, according to data compiled by Bloomberg and Strategas Research Partners. With borrowing expenses at record lows, executives are finding it harder to squeeze costs, causing profit margins to contract for the first time since 2009.

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