Stocks rise with commodities while Spain bonds, yen strengthen

‘Sustainable Recovery’

The benchmark equity gauge is about 3% below its record high reached in October 2007. The index erased a weekly decline today after falling earlier on renewed concerns about the euro-area debt crisis

“Confidence is emerging here,” James Paulsen, chief investment strategist at Minneapolis, Minnesota-based Wells Capital Management said in a television interview on “Bloomberg Surveillance with Tom Keene.” His firm oversees $332 billion in assets. “People are finally deciding that this looks more like a sustainable recovery.”

The rally has left the S&P 500 trading at the most expensive valuation in 15 months. The price-earnings ratio for the U.S. equity benchmark has increased 25% to 14.9 since October 2011. That’s still 10% cheaper than the average multiple of 16.6 from the past decade.

In Europe, the Stoxx 600 trimmed this week’s decline to 0.3% as a gauge of banking shares climbed 2.8%, the most in a month.

European Bonds

Ireland’s five-year note yields dropped nine basis points to 2.82% after the nation won an agreement to restructure the costs of rescuing the former Anglo Irish Bank Corp. Italian and Portuguese bonds also gained, along with U.K. and French debt, while Germany’s 10-year bund retreated.

EU leaders agreed to a seven-year budget that cuts spending for the first time, bowing to U.K. Prime Minister David Cameron’s insistence on thrift.

The deal was struck after 25 1/2 hours of talks in Brussels, according to a post on Twitter by EU President Herman Van Rompuy today. While he didn’t disclose a figure, the final draft blueprint for 2014-2020 included a spending ceiling of 960 billion euros ($1.3 trillion), down from an original proposal of 1.047 trillion euros and less than the 994 billion euros spent in the current budget cycle.

‘Prudent’ Cuts

“The European Union’s decision to cut the budget is a prudent one,” Richard Scrope, who helps manage the equivalent of about $160 million at Oriel Asset Management LLP in London, said in a phone interview. “The improvement in China’s data is a positive for European equities.”

Bwin.Party Digital Entertainment Plc and 888 Holdings Plc jumped more than 16% as New Jersey Governor Chris Christie said he would be willing to allow a 10-year trial period of online betting. TDC A/S fell 2 percent, the biggest retreat in 10 weeks, as the Danish phone company’s private- equity owners offered a 15% stake for sale.

Sony tumbled the most since November 2008 after Japan’s largest consumer-electronics maker reported an eighth straight quarterly loss. Nissan Motor Co. fell as the nation’s second- biggest carmaker posted third-quarter profit that fell short of analysts’ estimates.

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