U.S. Stocks Advance as Concern Over Dubai Eases, Crude Rallies

Nov. 30 (Bloomberg) -- U.S. stocks rose, extending a monthly gain for the Standard & Poor’s 500 Index, as concern eased over a possible default by Dubai World. Oil rallied as a British yacht crew was seized by Iran, while aluminum and zinc led industrial metals higher. Treasuries were little changed. The S&P 500 added 0.4 percent to 1,095.63 at 4:10 p.m. in New York, as Wells Fargo & Co. and JPMorgan Chase & Co. led financial shares to the steepest advance among 10 groups. U.S. equities erased losses in the final hour as Dubai World said it is in “constructive” initial talks with banks to restructure about $26 billion in debt. The Dollar Index, which gauges the U.S. currency against six major trading partners, lost 0.3 percent and crude oil climbed 1.6 percent. “People are relieved that the Dubai situation seems to be getting better,” said Charles Bobrinskoy, vice chairman of Ariel Investments, which manages $5 billion in Chicago. “What looked last week like there might be a $60 or $80 billion meltdown for European banks at this point looks like it’s not going to be a big deal.” The announcement last week that Dubai World was struggling with $59 billion in liabilities hit stock markets around the world, reducing global market value by 2.5 percent to $48.1 trillion last week. Dubai’s Department of Finance today said the emirate’s government hadn’t guaranteed Dubai World’s debt. Equities in developing nations rallied today as the Chinese government said it will maintain stimulus policies next year and India’s 7.9 percent growth in gross domestic product beat forecasts. The MSCI Emerging Markets Index jumped 1.2 percent, the most in a week. November Rally The S&P 500, the benchmark gauge of U.S. equities, extended its November rally to 5.7 percent as it rebounded from the first monthly decline since reaching a 12-year low in March. S&P 500 financial shares added 2.7 percent today after the group plunged by the same amount on Nov. 27. The Dow Jones Industrial Average climbed 34.92 points, or 0.3 percent, 10,344.84 and extended its monthly gain to 6.5 percent The U.A.E.’s central bank said it “stands behind” Dubai’s local and foreign lenders after the request by government- controlled Dubai World for a standstill agreement with creditors threw doubt on $59 billion of liabilities. U.S. equities slumped earlier in the day on concern that holiday sales will disappoint investors. Target Corp. slid 2.4 percent and Macy’s Inc. lost 3.9 percent. Retail Sales The National Retail Federation said the average shopper spent $343.31 in stores and online over the Thanksgiving holiday weekend, less than the $372.57 spent during the same period last year. The group is sticking to a forecast for a 1 percent drop in spending this holiday season. “The Black Friday weekend wasn’t that great to justify where these stocks are trading,” said Don Wordell, a fund manager for Atlanta-based RidgeWorth Capital Management, which oversees about $62 billion. “Where’s the money going to come from with the consumer? There aren’t plentiful jobs out there.” Europe’s Dow Jones Stoxx 600 fell 1.4 percent, trimming the benchmark’s monthly gain to less than 1 percent. Bank of Ireland Plc slid 5.3 percent in Dublin after saying it may report a loss of 3.4 billion euros ($5.1 billion) on loans it sells to the country’s so-called bad bank. Lloyds Banking Group Plc and Royal Bank of Scotland Group Plc lost at least 4.5 percent to lead the U.K.’s FTSE 100 Index to a 1.1 percent retreat. British banks have the most to lose among international lenders from the debt crisis in the U.A.E., with a combined $49.5 billion of loans outstanding, according to a report from Royal Bank of Scotland that cites Bank for International Settlements data in June. Abu Dhabi, Dubai Shares Tumble Abu Dhabi’s ADX General Index sank 8.3 percent, the most since Bloomberg began compiling the data in 2001. The Dubai Financial Market General Index tumbled 7.3 percent, the most in a year, on the first trading day since the government said Nov. 25 that Dubai World may delay debt payments. Markets were closed through Nov. 29 for the Eid Al Adha holiday. Dubai credit-default swaps tightened for the first time in a week, declining 59 basis points to 588 basis points, according to prices from CMA Datavision. Default swaps, which fall as the perception of credit quality improves, for Abu Dhabi narrowed 28 basis points to 147 and contracts linked to DP World Ltd. dropped 100 basis points to 644. A basis point equals 0.01 percentage point. The Shanghai Composite Index rose 3.2 percent for the biggest gain among indexes in major emerging markets. India’s Bombay Stock Exchange Sensitive Index added 1.8 percent as the growth in GDP last quarter was the fastest pace in 1 1/2 years. Dollar Weakens The dollar declined against 11 of 16 major currencies as waning concern that Dubai World may default fanned demand for higher-yielding assets. The U.S. currency fell 1.1 percent compared with the South Korean won and 1 percent versus the Australian dollar. It slipped 0.3 percent versus the yen and 0.1 percent against the euro. Treasury longer-term securities were little changed, with the 10-year note yielding 3.2 percent. Ten-year yields touched the lowest since Oct. 2 last week as Dubai World sought to delay loan payments. The U.S. will announce Thursday the how much it will sell in 3- and 10-year notes and 30-year bonds next week. The extra yield investors demand to own emerging-market dollar bonds instead of U.S. Treasuries increased one basis points, or 0.01 percentage point, to 3.26 percentage points, according to JPMorgan Chase & Co. The so-called spread swelled 14 basis points on Nov. 27. Crude oil for January delivery rallied $1.23, or 1.6 percent, to settle at $77.28 a barrel in New York. Futures are up 73 percent this year. Oil advanced as much as 2.6 percent after the U.K. government said the British yacht was stopped by Iranian naval vessels and the crew is being held in Iran. Oil also advanced after the Institute for Supply Management-Chicago Inc. said its business barometer increased to 56.1 in November, the highest level since August 2008 and above the 53 median estimate of economists in a survey.