June 16 (Bloomberg) -- U.S. stocks rallied, rebounding as financial shares erased losses, after a drop in jobless claims and growth in housing starts tempered concern about the economy and higher costs for banks. Treasuries gained, pushing yields on 10-year notes to a 2011 low, on speculation Greece is struggling to avoid default.
The Standard & Poor’s 500 Index rose 0.2 percent at 4 p.m. in New York. It fell 0.6 percent earlier, trimming its year-to- date gain to less than 0.1 percent, after two people familiar with the matter said the Basel Committee on Banking Supervision is considering capital surcharges of as much as 3.5 percentage points. Yields on 10-year Treasuries slipped to 2.88 percent. The euro rose 0.2 percent to $1.4204 after weakening 0.8 percent. Copper and wheat declined.
The S&P 500 rose as much as 0.7 percent this morning after a drop in jobless claims and growth in housing starts tempered concern the economy is slowing. Stocks reversed gains as people familiar with the matter told Bloomberg News that the largest lenders would face higher surcharges if they grow bigger. In Greece, Prime Minister George Papandreou called on his allies in parliament to back austerity measures needed to qualify for international aid and avoid a sovereign debt default.
“The market is looking for good news,” said Richard Sichel, who oversees $1.6 billion as chief investment officer at Philadelphia Trust Co. “We’ve got somewhat better economic data. It’s important to see improvement in jobs and housing because they are the most troubling parts of the economy. That sets a more positive tone despite some of the overhangs, including Europe’s debt crisis.”
Americans filing for unemployment benefits totaled 414,000 last week, less than the median economist estimate of 420,000 in a Bloomberg survey, according to the Labor Department. The Commerce Department said housing starts in the U.S. increased more than forecast in May, led by a jump in the West as other parts of the country languished.
Citigroup Inc. fell 1 percent and JPMorgan Chase & Co. slipped 0.8 percent following the report on the Committee on Banking Supervision discussions. The KBW Bank Index lost as much as 0.6 percent before ending the day with a 0.6 percent rally. Bank of America Corp. rose 1 percent, and Wells Fargo & Co. climbed 0.9 percent.
After U.S. stock exchanges closed, Research In Motion Ltd. forecast second-quarter revenue and profit that missed analysts’ estimates and said it will cut jobs as a lack of new models prompts consumers to buy rival devices. The maker of the BlackBerry smartphone sank 16 percent at 5:10 p.m. in New York.
The S&P 500 posted the only gain among benchmark indexes for equities in 24 developed markets tracked by Bloomberg. The Greek index plunged 2.8 percent. Greek government bonds slumped, pushing the yield on the two-year note above 30 percent for the first time, as Papandreou’s failure to win support for more austerity fueled speculation of a default.
Portuguese and Irish two-year yields also climbed to the most since the euro’s 1999 debut, while the 10-year Spanish yield jumped to the highest since 2000 as the country’s borrowing costs rose at a debt sale. The cost of insuring against default on Greek, Irish and Portuguese government debt surged to records. Papandreou will reshuffle his Cabinet and seek a confidence vote today. German government bonds gained, pushing the 10-year yield to a five-month low.
The yield on Greece’s two-year notes jumped 128 basis points to 29.30 percent, after being as high as 30.32 percent. Ireland’s two-year yield increased 86 basis points to 12.96 percent. The Portuguese two-year yield surged 58 basis points to 13.02 percent.
Copper fell for the sixth time in seven sessions on concern that Greece’s debt crisis may damp global economic growth, curbing demand for industrial metals. Futures dropped 0.1 percent to $4.136 a pound.
Wheat futures fell to a three-month low on speculation that global supplies will be ample as Russia resumes exports next month, while rains improve crop prospects in Ukraine. Futures for September delivery plunged 4.2 percent to $7.0825 a bushel.
--With assistance from Stephen Kirkland and Agnieszka Troszkiewicz in London and Lukanyo Mnyanda in Edinburgh. Editors: Michael P. Regan, Nick Baker
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