European equities rose as Italian banks climbed before a meeting to discuss cleaning up the financial system. Emerging markets advanced after signs of a pick-up in Chinese industrial demand, while the Swiss franc weakened with government bonds.
The Stoxx Europe 600 Index extended Friday’s gains, putting it on course for the biggest back-to-back advance since March, and futures on U.S. stock indexes were also higher. The Shanghai Composite Index rebounded from a one-week low as a report showed China’s producer prices increased month-on-month for the first time since September 2013, also boosting iron ore. Switzerland’s franc fell the most this month versus the euro and the yen halted a six-day run of gains, while South Africa’s rand rallied.
“Investors won’t find it easy to believe in the rally until they get more evidence of a business-cycle recovery,” said Allan von Mehren, chief analyst at Danske Bank A/S in Copenhagen. “The good news is that we already know that the beginning of the year was pretty tough for most companies, so the bar has been set pretty low for this earnings season.”
The U.S. earnings season unofficially kicks off later Monday, when Alcoa Inc. reports quarterly results after markets close. European peers including Tesco Plc and Sodexo SA are scheduled to release financial reports this week. Analysts are forecasting profit at companies in Europe’s Stoxx 600 index will shrink in 2016, reversing earlier calls for earnings to improve.
The Stoxx 600 added 0.8 percent at 7:53 a.m. New York time. Shares in Shanghai added 1.6 percent while the South African rand jumped 1.5 percent and futures on the Standard & Poor’s 500 Index climbed 0.4 percent.
European shares erased earlier losses of as much as 0.8 percent as measures of banking stocks and commodity producers posted the biggest gains of the index’s 19 industry groups. Spain’s Banco Santander SA and Italy’s Intesa Sanpaolo SpA led the advance, while Anglo American Plc and ArcelorMittal rose at least 3.4 percent.
Italian Treasury and central bank officials will meet with executives of major banks, including UniCredit SpA and Intesa Sanpaolo, to discuss the creation of a fund that would buy bank shares and help the institutions tackle non-performing loans, according to people with knowledge of the talks.
S&P 500 Index futures indicate equities will advance for a second day, after Friday trimming their worst weekly slide in two months.
The MSCI Emerging Markets Index gained 0.6 percent, following a 1.1 percent decline last week. Benchmark gauges in Turkey and Russia gained at least 0.9 percent.
The Hang Seng China Enterprises Index of mainland companies listed in Hong Kong rose 1.2 percent. China’s producer prices increased 0.5 percent last month from February, official data showed Monday. The consumer-price index was at 2.3 percent in March from a year earlier, matching February’s level.
The Swiss franc fell 0.2 percent, its biggest drop since March 30, to 1.0888 per euro as demand for haven assets ebbed. The yen slipped 0.1 percent to 108.16 per dollar, having touched its strongest level in 17 months earlier on Monday.
Britain’s pound jumped against the euro, set for its biggest gain in almost a month, supported by a recovery in stocks, while the 19-nation shared currency fell against 11 of its 16 major peers. Sterling appreciated 0.7 percent to 80.09 pence per euro, the most since March 11.
The MSCI Emerging Markets Currency Index rose 0.4 percent. The measure is up 3.6 percent this year as the Bloomberg Dollar Spot Index, which tracks the greenback against 10 peers, fell 4.5 percent.
Turkey’s lira gained 0.7 percent, the second biggest advance among 24 emerging-market currencies, after a person familiar with the matter said political leaders are planning to choose Central Bank Deputy Governor Murat Cetinkaya as the next governor.
South Africa’s rand led gains, while South Korea’s won strengthened 0.6 percent, the most in a week.
Crude erased gains as Iraq boosted its March oil production to a record before a meeting in Qatar of OPEC members and other producers on April 17 to discuss capping output. West Texas Intermediate dropped 0.7 percent to $39.46 a barrel and Brent lost 0.4 percent to trade at $41.79.
U.S. natural gas futures slid 3 percent to $1.931 per million British thermal units, the biggest drop in more than two weeks.
Gold rose to the highest level in almost three weeks. Bullion for immediate delivery advanced 0.7 percent to $1,249.07 an ounce, extending a gain of 1.5 percent last week. Silver added 1.5 percent.
Iron ore rose $2.59, or 4.8 percent for the biggest advance in a month, to $56.62 a ton, according to a price index compiled by Metal Bulletin.
Bonds slipped for a second day after the yield on the Bank of America Corp. Global Broad Market Index plunged last week to the lowest in almost 20 years of data.
Treasury 10-year note yields increased two basis points to 1.74 percent. The yield on similar-maturity French bonds climbed three basis point to 0.46 percent and that for 10-year U.K. gilts added four basis points to 1.4 percent.
France hired banks to sell 20-year and 50-year securities in the coming days, the country’s debt office said on its website.
Ukrainian bonds rose, sending the yield on September 2025 notes down two basis points to 9.54 percent. Prime Minister Arseniy Yatsenyuk resigned on Sunday, clearing the path for an ally of President Petro Poroshenko to lead the government. Stalled reforms prompted the departure of key officials from the administration and a freeze in disbursements from a $17.5 billion International Monetary Fund bailout.
Parliament Speaker Volodymyr Hroisman, nominated by Poroshenko’s party, may be confirmed by lawmakers as early as Tuesday. Yatsenyuk his party would remain part of a revamped ruling coalition, alongside that of the president.
The Markit iTraxx Europe Index of credit-default swaps on investment-grade companies was one basis point higher at 81 basis points. An index of swaps on junk-rated companies climbed three basis points to 338 basis points, the highest in a month.