US stocks rise with emerging assets as dollar, bonds weaken

NEW YORK (BLOOMBERG) - US stocks rose with equities around the world, while government bonds declined as tepid manufacturing growth from China to Europe boosted the prospects for added stimulus in those regions.

The Standard & Poor's 500 Index added to its second monthly gain, while a rally in UK banks kept an index of European shares near a three-month high. The dollar slipped from a seven-month high versus the euro on speculation the Federal Reserve's first rate increase in nearly a decade has bee priced in. Ten-year Treasury notes fell for the first time since Nov 20, while copper led gains among commodities.

Global equities are getting off to a strong start in what has been the strongest month for stocks since 1988, as investors prepare for the European Central Bank's policy decision and US jobs data later this week.

Data by a private firm on Tuesday (Dec 1) showed China manufacturing unexpectedly advanced while factory growth in the euro area accelerated, though by enough to alter perceptions on the prospect for added stimulus.

"There's a bit more tolerance for risk right now because indices are flat and managers have to show return somewhere - there's only four weeks to go, and they're not doing it buying bonds," Ron Anari, the Jersey City, New Jersey-based senior vice-president of trading at ICAP Plc, said via phone. "The Fed is going to hike at some point and it might as well be now. The equity markets have got it pretty much absorbed."

The S&P 500 climbed 0.5 per cent at 9.33am in New York (10.33pm Singapore time). The index is coming of a 0.1 per cent gain in November, as signs of a strengthening US economy offset concerns of an imminent rate increase. The gauge has posted a December advance in six of the past seven years.

The MSCI All-Country World Index is heading for its first annual loss since 2011, though equities have wrapped up the year with gains on all but five occasions since 1988, with December posting the biggest and most frequent increases of any month, data compiled by Bloomberg show.