European, U.S. Stock Futures Advance on Rate-Cut Speculation By Michael Patterson
Oct. 7 (Bloomberg) -- European and U.S. stock futures rose as Australia's bigger-than-expected interest-rate cut spurred speculation central banks around the world will reduce borrowing costs to cushion their economies from the credit freeze. BP Plc, Europe's second-largest oil company, and Royal Dutch Shell Plc may follow their U.S.-traded securities higher after crude climbed for the first time in five days. Nokia Oyj, the world's biggest maker of mobile phones, might gain after Morgan Stanley recommended the stock. Europe's Dow Jones Stoxx 600 Index tumbled the most since 1987 yesterday as bank bailouts spread and falling commodities dragged down raw-materials producers. The Dow Jones Industrial Average fell as much as 800 points yesterday, then recouped more than half its losses in the final 75 minutes of trading on speculation the Federal Reserve will lower rates. Futures on the Euro Stoxx 50, a benchmark for the euro region, gained 45, or 1.6 percent, to 2,920 at 7:03 a.m. in London. The U.K.'s FTSE 100 Index may climb 99, according to CMC Markets, a betting firm. Futures on the Standard & Poor's 500 Index rose 1.5 percent. The MSCI Asia Pacific Index fell 1.1 percent, after earlier dropping as much as 3.2 percent. ``European markets are pinning all their hopes on a series of coordinated rate cuts,'' said Oliver Stevens, head of dealing at IG Markets in Melbourne. The Stoxx 600, down 34 percent this year, is valued at 10.05 times the reported earnings of companies in the index, the cheapest since Bloomberg began compiling the data in January 2002. Rate Cut Australia's central bank cut its benchmark interest rate by one percentage point, the most since a recession in 1992 and twice as much as most economists forecast. At least two dozen central banks around the world are scheduled to meet this month, according to Bloomberg data. The Bank of England, set to meet on Oct. 9, should cut its key lending rate by a half point to 4.5 percent, the British Chambers of Commerce said today. There's speculation ``that the next step will be for central banks to drop interest rates, possibly in a coordinated move,'' Matthew Buckland, a dealer at CMC Markets in London, wrote in a note to clients. ``This would certainly send a message to the markets, but again the success in sustaining a rally here would presumably be reliant on traders overlooking the panic aspects of this outcome.'' European finance ministers failed to agree on steps to shore up the banking system hours after their countries' leaders pledged to do whatever was needed to restore confidence. There appeared to be little support for suggestions from France and Italy that Europe create a U.S.-style bank rescue fund at yesterday's monthly meeting of euro-area finance ministers in Luxembourg. The U.S. Congress approved a $700 billion plan to buy mortgages and other debt-related securities from banks last week. Oil Rebounds BP's U.S.-traded securities ended the day 0.9 percent higher than the close in Europe. American depositary receipts of Shell, Europe's biggest oil company, finished 1.7 percent above the European close. Crude for November delivery jumped as much as $2.94, or 3.4 percent, to $90.75 a barrel in New York as some traders deemed yesterday's 6.5 percent decline excessive and investors speculated OPEC may announce output cuts at its December meeting as demand slows. Gasoline, natural gas and heating oil also rose. Nokia may climb after Morgan Stanley analysts rated the shares ``overweight'' in new coverage and said they may climb 37 percent on the company's ``brand leadership, strong management and financial firepower.'' They set a price estimate of 17.50 euros on the stock. To contact the reporter on this story: Michael Patterson in London at [EMAIL PROTECTED] Last Updated: October 7, 2008 02:13 EDT
