Europe, US gain on Fed cut

GLOBAL MARKETS

European stocks rose after analysts recommended buying shares of financial companies and investors speculated the worst may be over in a rout of global equity markets.

Man Group, the world's largest publicly traded hedge fund company, UniCredit SpA, Italy's biggest bank, and insurer Prudential paced gains. BHP Billiton and Rio

Tinto Group led mining stocks higher as metal prices increased.

The Dow Jones Stoxx 600 Index added 1.1 per cent to 364 as of 12:55 p.m. in London. All 18 industry groups gained. The Stoxx 50 rose 0.8 per cent, as did the Euro Stoxx 50, a measure for the euro region.

The Stoxx 600 has dropped 9.1 per cent since reaching a 6 1/2-year high on June 1 on concern that defaults among US borrowers with the poorest credit profiles may spill over to other markets. Stocks rallied on August 17 after the Federal Reserve reduced its discount rate.

National benchmarks increased in all 18 western European markets except Luxembourg. The UK's FTSE 100 added 1 per cent. Germany's DAX gained 0.5 per cent and France's CAC 40 advanced 1.2 per cent.

The biggest rally in four years for the Standard & Poor's 500 Index on August 17 helped US stocks recover most of last week's losses. US stock-index futures gained today and shares advanced in Asia.

US

US stock-index futures gained on speculation the Federal Reserve will cut interest rates, easing concern that a credit crunch may curb economic growth.

Goldman Sachs Group, the largest securities firm, and JPMorgan Chase & Co, the third-biggest US bank, climbed in Europe after Lehman Brothers Holdings Inc raised its recommendation on financial-services companies.

Alcoa, the world's second-largest aluminum producer, led advances among companies whose earnings are tied to economic growth.

Standard & Poor's 500 Index futures expiring in September added 1.7 to 1,451.6 as of 10:45 a.m. in London.

Dow Jones Industrial Average futures climbed 30 to 13,135 and Nasdaq 100 Index futures increased 3.5 to 1,895.75.

Options on Fed funds futures show traders see a 64 per cent chance that policy makers will cut their benchmark rate by 50 basis points to 4.75 per cent at the next meeting on Sept. 18.

The odds for a cut to 4.5 per cent at the October 31 meeting rose to 56 per cent. There was zero probability for both outcomes a week ago.