Rio Tinto Group added 3.7 percent as China’s spending on factories and property surged 26.5 percent in the first two months of the year. Citigroup Inc. rose 10 percent in New York after Treasury Secretary Timothy Geithner said the Obama administration will use capital injections as an incentive to get banks to sell distressed securities to investors.

The MSCI World Index increased 0.8 percent at 12:24 p.m. in London, trimming its 2009 decline to 21 percent. The measure of 23 developed nations jumped 5.3 percent yesterday as Citigroup’s Chief Executive Officer Vikram Pandit said the bank is having its best quarter since 2007.

“There have been a number of people warning for several days that with the horrendous sell-off that we have seen we could see a market bounce,” said Andrew Milligan, head of global strategy at Standard Life Investments in Edinburgh. “I’m not surprised we have had a rally from these levels and indeed they could go higher. But it would be an incredibly brave man to say we saw the low,” he said on Bloomberg Radio.

Investors from New York to London this month grew more convinced stocks will extend their decline, with pessimism in the U.S. climbing to the highest since the S&P 500 entered a bear market in July. Participants in the Bloomberg Professional Global Confidence Survey predict losses in the next six months for the S&P 500, Brazil’s Bovespa, Mexico’s Bolsa, the U.K.’s FTSE 100, Germany’s DAX, the Swiss Market Index and Spain’s IBEX 35.

S&P 500 Futures Climb

Futures on the Standard & Poor’s 500 Index climbed 1.5 percent. The benchmark index for U.S. equities rebounded from a 12-year low yesterday as all 10 industry groups advanced. The rally only lifted the S&P 500 to the highest level since Feb. 27.

Europe’s Dow Jones Stoxx 600 Index increased 0.8 percent, reversing an earlier decline of 1.4 percent. The regional gauge had dropped as JCDecaux SA forecast its first annual sales decline and utilities slumped.

The MSCI Asia Pacific Index added 2.7 percent today after HSBC Holdings Plc also said earnings are improving.

Rio Tinto, the third-biggest mining company, increased 3.7 percent to 2,068 pence. BHP Billiton Ltd., the world’s largest, gained 2.2 percent to 1,292 pence.

The gain in Chinese spending beat the 21.5 percent median estimate of 11 economists in a Bloomberg News survey. Signs of a Chinese recovery, including a surge in lending and gains in power consumption, have powered a 17 percent gain in the Shanghai Composite Index in 2009.

Citigroup, Bank of America

Citigroup, once the world’s largest bank, climbed 10 percent to $1.60, following a 38 percent rally yesterday. Bank of America added 8.4 percent to $5.19.

The private investors will also get federal loans to buy the distressed assets from banks, in a two-pronged strategy intended to revive trading in mortgage-backed debt. Geithner said in an interview with PBS’s Charlie Rose show yesterday “it requires making sure there’s capital available to the system, that these banks have the incentive to start to move this stuff, that there’s a mechanism available” to finance investors.

Morgan Stanley rallied 6.5 percent to $22.20. Goldman Sachs Group Inc. raised its recommendation on the stock to “buy” from “neutral” and added it to their “conviction buy” list.

“Morgan Stanley is well positioned to outperform peers due to its high capital position, reasonable valuation and leverage to improvement in the capital markets,” Goldman Sachs wrote in a note.

European Banks

Deutsche Bank AG, Germany’s biggest bank, rose 7 percent to 24.08 euros. Barclays Plc, the U.K. bank that turned down state funding last year, gained 6.7 percent to 72 pence.

JCDecaux tumbled 12 percent as the world’s second-largest seller of outdoor advertising scrapped its dividend. E.ON AG extended its two-day decline.

“Company outlook statements are dire and earnings visibility is extremely low across the market,” said Chirin Gill, a London-based fund manager at Daiwa SB Investments, which has $60 billion. “Earnings revisions may need to come down.”

Earnings for 269 companies in the Stoxx 600 that have reported earnings since Jan. 12 dropped 94 percent, according to Bloomberg data. That compares to a 58 percent contraction in profit for the 469 companies that have reported results in the S&P 500 during the same period.

JCDecaux, Utilities

JCDecaux slid 12 percent to 8.68 euros. The company reported a 51 percent drop in 2008 profit and said the decision to omit last year’s dividend was made “to maintain financial flexibility.”

JCDecaux forecast so-called organic revenue will decline this year for the first time in the company’s history. The company didn’t give a specific full-year forecast “given the reduced visibility.”

Utilities were the worst-performing industry group in the Stoxx 600 for a second day, falling 0.8 percent.

E.ON dropped 2.3 percent to 18.89 euros. The company said yesterday it expects 2009 profit before writedowns on assets and hedging derivatives will fall 10 percent.

UBS Loss

UBS AG added 1.7 percent to 9.96 Swiss francs after earlier falling 3.9 percent. Switzerland’s largest bank posted a 20.9 billion-franc ($18 billion) loss for 2008 after costs to settle a U.S. tax investigation and writedowns on securities.

The bank’s 2008 loss is the biggest in Switzerland’s history. UBS amassed more than $50 billion in writedowns and losses since the beginning of the subprime crisis, forcing it to raise more than $32 billion in capital from investors including the Swiss government, and cut 11,000 jobs.

Pirelli & C. SpA surged 9.8 percent to 16 euro cents. Deutsche Bank AG raised Europe’s third-largest tiremaker to “buy” from “hold.”

Toshiba Corp. rose 9.5 percent to 242 yen in Tokyo. The chipmaker will probably have operating profit of about 100 billion yen ($1 billion) in the year to March 2010, the Nikkei newspaper said, without saying where it got the information.

The S&P 500’s rebound from the 665 level is a bullish sign to traders who base predictions on so-called Fibonacci patterns in price charts. The index has rallied 7.9 percent since sinking to 666.79 on March 6. The low was within 0.3 percent of 665, a level at which the benchmark index would give up 61.8 percent of the 25-year rally beginning in 1982.

Fibonacci analysts use a system pioneered by 13th century mathematician Leonardo Pisano. To adherents, the performance of a stock or index when it approaches a 61.8 percent “retracement” can be used to forecast whether it will keep falling or recover.

 SOURCE: Bloomberg