Stocks: Wednesday’s review

Asian stocks fell, erasing gains, amid speculation that an unexpected expansion in China’s manufacturing reduces the need for easier monetary policy and as weaker economic reports in the U.S. dimmed the earnings outlook for exporters.

Nikkei 225 8,810 +7.28 +0.08%

Hang Seng 20,335 -55.44 -0.27%

S&P/ASX 200 4,226 -37.02 -0.87%

Shanghai Composite 2,268 -24.53 -1.07%

Industrial & Commercial Bank of China Ltd., the world’s biggest lender, slid 0.9 percent in Hong Kong.

Li & Fung Ltd., the supplier of toys and clothes to retailers including Wal-Mart Stores Inc., fell 1.5 percent.

Sumitomo Heavy Industries Ltd. sank 9.6 percent in Tokyo after the machinery maker cut its full-year profit forecast by 28 percent. Shipping stocks gained on speculation rising cargo rates will help shore up earnings.

European stocks advanced to a six- month high, with the Stoxx Europe 600 Index extending its best start to a year since 1998, as gauges of manufacturing increased from America to the euro area to China.

The Institute for Supply Management’s U.S. manufacturing index rose to 54.1 in January from 53.1 in December, the Tempe, Arizona-based group’s data showed today. Chinese manufacturing rose last month as the world’s second-biggest economy withstood weaker exports driven by the euro-area debt crisis and a government-induced property slowdown.

Greek bondholders may get a sweetener tied to a revival in economic growth that would ease the impact of accepting a lower interest rate on new bonds, people with knowledge of the talks said.

National benchmark indexes rose in 17 of the 18 western European markets. France’s CAC 40 added 2.1 percent. The U.K.’s FTSE 100 climbed 1.9 percent and Germany’s DAX jumped 2.4 percent.

Banks and carmakers led gains.

Banco Santander SA, Spain’s biggest lender, advanced 3.6 percent to 6.16 euros. Credit Agricole SA, France’s third-largest bank, rallied 7.4 percent to 5.06 euros.

BP Plc, Europe’s second-biggest oil company, gained 2.6 percent to 483 pence.

ICAP jumped 7.7 percent to 362 pence. The world’s largest broker of inter-bank transactions said pretax profit for the year ending March 31 will be at the “upper end” of the current range of analyst estimates of 336 million pounds ($528 million) to 358 million pounds. ICAP had said in November it expected full-year profit to be within analysts’ projections at that time of 358 million pounds to 390 million pounds.

Renault SA jumped 4.9 percent to 34.18 euros. Renault- Nissan 2011 global sales rose 10 percent to a record, driven by emerging markets and the U.S., the company said.

U.S. stocks advanced, snapping a four-day decline in the Standard & Poor’s 500 Index, amid signs that manufacturing across the world is strengthening.

Equities rallied after data showing manufacturing in the U.S. grew at the fastest pace in seven months. Factory indexes in China improved and a U.K. manufacturing gauge jumped to an eight-month high. In Germany, output grew for the first time since September. Manufacturing contracted less than initially estimated in the euro region. A spokesman said Greece expects to complete talks on a private sector debt swap and a second international financing deal for the country in the next days.

Dow 12,716.46 +83.55 +0.66%, Nasdaq 2,848.27 +34.43 +1.22%, S&P 500 1,324.08 +11.67 +0.89%

Bank of America Corp. (ВАС) added 3.2 percent, the most in the Dow, to $7.36. Citigroup Inc. advanced 2.9 percent to $31.60.

Morgan Stanley climbed 4 percent to $19.39. Facebook will file plans with regulators today to raise $5 billion, though the amount may increase, two people said. Morgan Stanley stands to earn a larger share of the fees collected by securities firms for arranging the IPO.

Whirlpool surged 13 percent to $61.64 after also reporting a 20 percent gain in fourth-quarter profit. Cost reductions and price increases “positively impacted” the results last quarter, the company said today in a statement.