Related News * Stocks Surge Worldwide as S&P 500 Completes Biggest 10-Day Gain Since 1938

[link to www.bloomberg.com]

March 23 (Bloomberg) -- U.S. stocks rallied, capping the market’s steepest two-week gain since 1938, as investors speculated the Obama administration’s plan to rid banks of toxic assets will spur growth and investor Mark Mobius said a new bull market has begun.

Bank of America Corp. and Citigroup Inc. both soared at least 19 percent as the U.S. Treasury said it will finance as much as $1 trillion in purchases of distressed assets. Exxon Mobil Corp. and Chevron Corp. jumped more than 6.7 percent after oil rose to an almost four-month high. The Standard & Poor’s 500 Index extended its rebound from a 12-year closing low on March 9 to 22 percent as all 10 of its main industry groups advanced.

“You have to be careful not to miss the opportunity,” said Mobius, who helps oversee about $20 billion of emerging- market assets as executive chairman at San Mateo, California- based Templeton Asset Management Ltd. “With all the negative news, there is a tendency to hold back,” he said in a Bloomberg Television interview from Hong Kong.

The S&P 500 gained 7.1 percent to 822.92, its biggest increase since Oct. 28. The Dow Jones Industrial Average jumped 497.48 points, or 6.8 percent, to a five-week high of 7,775.86. The MSCI World Index climbed for the ninth time in 10 days, adding 5.4 percent. Twenty-one stocks rose for each that fell on the New York Stock Exchange, the broadest rally since at least July 2004.

Public-Private Investment Program

The Treasury’s Public-Private Investment Program will use $75 billion to $100 billion from the $700 billion Troubled Asset Relief Program enacted last year, giving the government “purchasing power” of $500 billion. The Treasury said the program may double “over time.”

Benchmark indexes extended gains in early trading after an industry report showed home sales unexpectedly increased in February.

The MSCI World, a gauge of 23 developed nations, has added almost 21 percent since March 9 as Citigroup, Bank of America and JPMorgan Chase & Co. said they made money in the first two months of 2009 and the Federal Reserve agreed to buy $300 billion of government bonds to combat the financial crisis.

The MSCI Emerging Markets Index of 23 developing nations gained 5.1 percent today, erasing its 2009 drop. Mobius, who was voted among the “Top Ten Money Managers of the 20th Century” by the Carson Group, said emerging markets are in “better shape” than developed economies.

‘Helluva Rally’

“This is a helluva rally,” Myles Zyblock, the Toronto- based chief institutional strategist for RBC Capital Markets, said in a note to investors. The U.S. stock market has moved “through the 50-day moving average and then the 800 area like a hot knife through butter.”

Europe’s Dow Jones Stoxx 600 Index gained 3 percent, pushing its rebound from a 12-year low on March 9 to almost 13 percent. The MSCI Asia Pacific Index added 3.4 percent.

The yen and dollar fell against most major counterparts on speculation the Treasury’s plan will reduce demand for the currencies’ safety.

Bank of America, the largest U.S. lender by assets, surged 26 percent to $7.80. Citigroup, whose biggest shareholder may soon be U.S. taxpayers, soared 19 percent to $3.13. JPMorgan added 25 percent to $28.86. The three banks led gains in all 30 Dow average companies.

Deutsche Bank AG, Germany’s largest bank, rose 8.5 percent to 30.70 euros. Mitsubishi UFJ Financial Group Inc., Japan’s biggest publicly traded bank, advanced 4.7 percent to 512 yen.

Geithner’s Plan

Treasury Secretary Timothy Geithner has crafted an approach to spur investment funds to purchase the illiquid securities and loans that have caused credit to dry up. Because the program depends on private investors, it may be months before it’s clear if it will work. The plan relies on Federal Reserve financing and Federal Deposit Insurance Corp. debt guarantees.

“With the government taking most of the downside, that is basically what’s going to entice bids,” Jeremy Siegel, finance professor at the University of Pennsylvania’s Wharton School of Business, told Bloomberg Television. “This is a very, very positive thing for the credit markets.”

The S&P 500 Financials Index of banks, insurers and investment firms has surged 58 percent from its March 6 low including an 18 percent rally today, its steepest since Nov. 24.

While U.S. bank stocks have climbed this month, bonds of the companies yield 8.55 percentage points more than Treasuries, about the widest in 13 years, according to Merrill Lynch & Co. indexes. The gap between yields of financial institutions’ bonds and Treasuries widened even as their shares jumped, suggesting this month’s record rally in financial stocks is in jeopardy.

Energy Advance

S&P 500 Energy shares climbed 7.8 percent collectively, the group’s steepest advance in four months.

Exxon Mobil, the largest U.S. oil company, jumped $4.44, or 6.7 percent, to $70.53. Chevron, the second-biggest, added $4.44, or 6.9 percent, to $69.15.

Crude oil for May delivery rose $1.73 to $53.80 a barrel in New York as the rally in stocks spurred speculation that fuel use will rebound.

Petro-Canada added 20 percent to C$35.70 in Toronto after Suncor Energy Inc. agreed to buy the company in an all-share transaction to gain assets in the North Sea, North Africa and Latin America. The deal was valued at C$19.3 billion ($15.6 billion), a record for a Canadian energy company.

Takeovers

The deal adds to a series of takeovers this year, including Merck & Co.’s bid for Schering-Plough Corp., Pfizer Inc.’s offer for Wyeth and Agrium Inc.’s pursuit of CF Industries Holdings Inc. CF today told shareholders to reject Agrium’s buyout terms and sweetened its own proposal for rival fertilizer maker Terra Industries Inc.

Tiffany & Co. jumped 16 percent to $23.37, the biggest gain since October. The world’s second-largest luxury-jewelry retailer reported fourth-quarter profit excluding some items of 85 cents a share, beating the average analyst estimate by 8.1 percent.

“You want to be in the market,” David Katz, who oversees $1 billion as chief investment officer of Matrix Asset Advisors, told Bloomberg Radio. “There are a lot of great businesses that could be 100 to 200 percent higher over the next one to two years.”

Walgreen, GE

Walgreen Co. rose 9.4 percent, the most since October, to $26.58. The second-largest U.S. drugstore chain reported quarterly profit and sales that beat the average estimate from analysts surveyed by Bloomberg after the company lowered prices on many non-drug products to lure consumers.

General Electric Co. gained 9.3 percent to $10.43 even after the owner of GE Capital and NBC Universal was downgraded two levels to Aa2 at Moody’s Investors Service, losing its Aaa rating for the first time in four decades. S&P analysts cut GE’s ratings on March 12.

Benchmark indexes extended gains as U.S. sales of previously owned homes unexpectedly climbed in February after record foreclosures brought bargain hunters into the market to take advantage of lower prices. Purchases increased 5.1 percent to an annual rate of 4.72 million from 4.49 million in January, the National Association of Realtors said.

Home Depot Inc., the world’s largest home-improvement retailer, rose 4.9 percent to $23.25.

The S&P 500 is still down 47 percent from its October 2007 record and the MSCI World is lower by 51 percent from its peak the same month after credit-related losses at financial firms reached $1.2 trillion and the U.S. economy contracted by the most in 26 years last quarter.