May 22 (Bloomberg) -- Stocks rose for a second day as U.S. home sales increased and speculation grew that leaders in China and Europe will do more to support economic growth. Spanish bonds rallied, while Treasuries, German bunds and the yen fell.
The MSCI All-Country World Index added 0.8 percent at 1:30 p.m. in New York and the Standard & Poor's 500 Index rose 0.4 percent, adding to its biggest gain in two months. The yen depreciated 0.9 percent against the dollar after Fitch Ratings downgraded Japan's debt. Crops led commodities lower while oil retreated as Iran agreed to let Western nuclear inspectors into the country. Ten-year Treasury yields rose for a third day.
U.S. equities extended gains after the National Association of Realtors said sales of existing homes increased in April for the first time in three months, adding to signs the housing market is recovering. China plans to speed up approval of infrastructure projects and allocate construction funding faster to improve growth, the China Securities Journal reported. Fitch cut Japan's rating to A+ with a negative outlook.
"We're getting some refocus back on economic news," said Michael Strauss, who helps oversee about $27 billion of assets as the chief investment strategist at Commonfund in Wilton, Connecticut. "There's a real turn happening in the U.S. housing sector. It seems to be a done deal that China will stimulate growth. There's also some hope regarding the meeting taking place in Europe tomorrow."
'Everything Necessary'
The S&P 500 surged 1.6 percent yesterday, the biggest gain since March 13, after German Finance Minister Wolfgang Schaeuble said yesterday that European leaders will do "everything necessary" to keep Greece in the 17-nation euro and focus on steps to aid economic expansion.
An S&P index of 12 homebuilders rallied 2.6 percent and is up almost 6 percent in two days. PulteGroup Inc. and Lennar Corp. rallied at least 2.8 percent to pace gains today. Purchases of previously owned homes increased 3.4 percent to a 4.62 million annual rate, according to figures from the Realtors association, adding to signs the industry is stabilizing.
JPMorgan Chase & Co. rallied 5.8 percent, rebounding from a 20 percent plunge following its May 10 disclosure of at least $2 billion in trading losses from credit derivatives. Wells Fargo & Co., Citigroup Inc. and Bank of America Corp. also rose at least 2.4 percent, sending financial shares to the biggest advance among 10 industries in the S&P 500.
Facebook Slips
Facebook Inc. lost 5.2 percent to $32.27, extending yesterday's 11 percent plunge, in its third day of trading after selling shares at $38 in the biggest initial public offering for an Internet company.
The Stoxx Europe 600 Index increased 1.9 percent. Rio Tinto Group and Renault SA led gains in mining companies and automakers, rising at least 4 percent. Homeserve Plc, the U.K. provider of emergency-repair services that suspended telephone sales and marketing in October after a review showed they didn't meet its standards, plunged 29 percent after saying the Financial Services Authority will investigate "certain historic issues."
European stocks held gains after the Organization for Economic Cooperation and Development said Europe's debt crisis risks spiraling and seriously damaging the world economy.
European Meetings
European leaders are scheduled to meet in Brussels tomorrow. German Chancellor Angela Merkel said she won't shy away from disagreeing with French President Francois Hollande, saying good cooperation "doesn't exclude differing positions." France isn't out to create conflict and will welcome "all the tools, all the proposals" at the meeting, Hollande said.
The German 10-year bund yield added four basis points to 1.47 percent, while similar-maturity Spanish bond yields slid 20 basis points after the government beat its maximum target at an auction today.
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