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Ford Motor Co. tapped Chinese automaker Geely as its preferred bidder for its Volvo unit, the company announced Wednesday.

Ford has been looking for a buyer for Volvo since December 2008, after a plunge in industry sales forced it to retrench to focus on its core U.S. brands of Ford, Mercury and Lincoln.

Ford (F, Fortune 500) has already sold the Land Rover, Jaguar and Aston Martin brands, as well as its controlling stake in Japanese automaker Mazda.

But the premium Swedish brand Volvo was by far the strongest of the non-core Ford brands, with a well-established reputation for quality and safety and a solid dealership network. Even with doubts about its future, Volvo’s U.S. market share stayed essentially unchanged this year at 0.6%, according to sales tracker Autodata.

Ford cautioned in its statement that there was still much work needed to be done in sales negotiations with Geely and that there was no timeline to close the deal. No terms were announced.

"Ford believes Geely has the potential to be a responsible future owner of Volvo and to take the business forward while preserving its core values and the independence of the Swedish brand," said Ford chief financial officer Lewis Booth in a statement bad credit payday advance.

China’s auto market now rivals the U.S. in terms of size. But even though sales are growing fast in China, the Chinese auto industry has relatively few exports.

Geely’s interest in breaking into the U.S. market is well documented. It was one of the first Chinese automakers to display its vehicles at the North American International Auto Show in Detroit.

In late 2006, Chrysler Group and Geely announced an agreement to have the Chinese automaker develop a subcompact car that Chrysler could sell in the U.S. market. But that deal ended in 2008 without a vehicle being produced. A Chrysler spokesman said the discussions never progressed very far.

Geely is not the only Chinese company looking to snap up a U.S. brand. Sichuan Tengzhong Heavy Industrial Machinery Co. has reached a definitive agreement to buy the Hummer brand from General Motors. 

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Indian central bank Governor Duvvuri Subbarao prepared investors for higher interest rates in coming months, shifting policy focus toward stemming inflation as the world emerges from the worst recession since the 1930s.

Subbarao yesterday said “it may be appropriate to sequence the ‘exit’ in a calibrated way” from record monetary stimulus, and told banks to set aside more cash in government bonds to restrain credit. The Reserve Bank of India also told lenders to hold more funds as provisions for loans to property companies.

Central bank watchers said policy makers may start raising rates at or before their next quarterly meeting, in January. India’s announcement underscored evidence of a strengthening rebound across Asia, with China projecting an acceleration in industrial production yesterday and the Bank of Japan saying the economy is improving in all of the nation’s nine areas.

“It’s absolutely critical that the monetary stimulus is withdrawn in an orderly way to curb inflation without upsetting economic growth” in India, said D. H. Pai Panandiker, president of RPG Foundation, an economic policy group in New Delhi. “Inflation is like a tax on the poor.”

Stocks from India to China dropped yesterday amid concern among some investors about policy makers’ steps to reverse stimulus measures. The Bombay Stock Exchange’s Sensitive Index fell 2.3 percent, the most in two months. The Shanghai Composite Index slid 2.8 percent.

Earnings Momentum

The Reserve Bank of India’s injection of 5.85 trillion rupees ($130 billion) of cash since September 2008 to sustain credit to companies and households has paid off. Companies from automobile makers Tata Motors Ltd. and Maruti Suzuki India Ltd. to home appliance firm Whirlpool of India Ltd. reported rising demand in recent weeks.

Maruti, the New Delhi-based maker of half the cars sold in India, reported that profit almost doubled last quarter on higher consumer spending. Sales at Mumbai-based Tata Motors, India’s largest truckmaker, rose in the three months through September, the longest-winning streak in at least two years, helped by a decline in auto-loan rates and increased spending by the government spurred.

Whirlpool of India, which has headquarters in New Delhi, this week said its second-quarter earnings were the highest on record.

‘Central Issue’

Now, draining the central bank’s liquidity injections has become a “central issue in our policy matrix,” Subbarao, a 60- year-old former top Finance Ministry bureaucrat who was appointed governor for a three-year term in September 2008, said yesterday. There are “definitive” signs that the economy is recovering, he said.

India’s industrial production rose 10.4 percent in August, the most in 22 months after the government announced tax cuts and the central bank cut rates and injected cash into banks since September last year. Cumulatively, the stimulus added up to more than 12 percent of the economy.

Subbarao, a career civil servant who studied under a fellowship at the Massachusetts Institute of Technology, said prospects for Indian industry are rising. The revival in Indian stock and global financial markets will spur investment, he said, maintaining a growth forecast for India’s $1 payday advance.2 trillion economy at 6 percent “with an upward bias.”

He raised the inflation estimate to 6.5 percent from 5 percent by March 31. The benchmark wholesale inflation rate was 1.21 percent in the week ending Oct. 10, a sixth straight gain.

‘Nervous’ Markets

“Inflation pressures are mounting,” said Dariusz Kowalczyk, chief investment strategist at SJS Markets Ltd. in Hong Kong. “Markets are nervous that the stimulus will be taken away — much of the gains in stocks and other assets were driven by the liquidity from the stimulus.”

The Sensitive Index is up 70 percent this year, outpacing the MSCI World Index’s 34 percent advance in the same period. Elsewhere in Asia, the Shanghai Composite Index has climbed 66 percent and Hong Kong’s Hang Seng 54 percent over the same period, contributing to concerns that asset-price bubbles will threaten to roil economies in the region.

The Reserve Bank of Australia raised rates three weeks ago, citing costlier real estate, and Bank of Korea Governor Lee Seong Tae said Oct. 23 that keeping rates at a record low may not be healthy for the economy. Regulators from Hong Kong to Singapore to South Korea have also told banks in recent weeks that they need to tighten lending standards.

In Europe, Norway’s Norges Bank may become that continent’s first central bank to increase interest rates today, according to the median forecast in a Bloomberg News survey.

Policy Rates

The RBI kept its policy rates unchanged yesterday, with the reverse repurchase rate at 3.25 percent, the repurchase rate at 4.75 percent and the cash reserve ratio at 5 percent, in line with the median forecast of 24 economists surveyed by Bloomberg News.

“By revising the inflation target, the RBI has clearly highlighted that inflation will be an area of concern going forward,” said Yashika Singh, a Mumbai-based economist at Dun & Bradstreet Information Services India Ltd. Singh expects the central bank to rely on higher cash reserve ratio to contain inflation before raising interest rates. She expects a 25 basis point increase in the reserve ratio in December.

Goldman Sachs Group Inc. predicted a reverse-repurchase rate increase at the January meeting, and recommended that investors buy the rupee against the dollar. India’s currency will appreciate to a projected 44 per dollar in three months and 43.4 in six months, according to the note by Goldman Sachs economist Tushar Poddar sent to clients yesterday.

The rupee closed at 46.925 yesterday in Mumbai.

With yesterday’s move, Indian banks will be required to hold 25 percent of their deposits in government bonds, up from 24 percent previously. That won’t affect their ability to lend because most have holdings amounting to 27.6 percent, Subbarao said. Bonds climbed the most in more than a month yesterday.

“The economy is on a comeback track,” Finance Secretary Ashok Chawla said in New Delhi yesterday. “At this stage, the central bank’s done what it needs to contain inflation and support growth.”

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Home values in the U.S. kept stabilizing and consumer confidence rose, bolstering the case that an economic recovery is at hand, economists said before reports today.

The S&P/Case-Shiller index covering home prices in 20 cities fell 11.9 percent in August from a year earlier, the smallest drop in 19 months, according to the median forecast of economists surveyed by Bloomberg News. Sentiment this month climbed, a report from the Conference Board may show, even as Americans continue to fret over employment prospects.

Rising home sales, due in part to government programs including the first-time buyer credit and efforts to lower borrowing costs, have helped stem the slump in property values that precipitated the worst recession since the 1930s. Sustained gains in household spending, the biggest part of the economy, may be harder to come by as joblessness mounts.

“Home prices are clearly in a bottoming-out process and we’ll be at much more comfortable levels by next year,” said Mike Englund, chief economist at Action Economics LLC in Boulder, Colorado. “Consumers still face headwinds. The panic is over, but people need to see outright positive news on the horizon before we’ll get a big jump in confidence.”

The S&P/Case-Shiller figures, due at 9 a.m., would follow a 13.3 percent drop in the year ended July. Projections in the survey ranged from declines of 11 percent to 13.3 percent. Year-over-year records began in 2001. The gauge rose in June and July on a monthly seasonally adjusted basis.

Monthly Gain

Englund is among economists predicting the S&P/Case- Shiller report will show prices kept climbing in August compared with a month earlier. In July, the home-price index rose 1.2 percent from the prior month, the biggest gain since October 2005.

At 10 a.m., the New York-based Conference Board may report that its sentiment index rose in September to 53.5 from 53.1. Estimates in the Bloomberg survey ranged from 48 to 57.

In the latest evidence of rising demand, existing home sales in September jumped to a 5.57 million annual rate, more than economists forecast and the highest in more than two years, according to data from the National Association of Realtors issued last week.

Housing and manufacturing are leading the stabilization in the economy, the Federal Reserve said in the Beige Book survey of conditions in its 12 district banks during September and early October.

Fed Observation

“Most districts reported that housing market conditions improved in recent weeks, primarily from a pickup in sales of low- to middle-priced houses,” the Fed said.

One risk to the emerging stabilization is foreclosures, which worsen the property glut. Foreclosure rates will climb through late 2010, peaking only after the unemployment rate reaches 10.2 percent in the second quarter, Jay Brinkmann, chief economist at the Mortgage Bankers Association, said this month.

Unemployment, which is projected to exceed 10 percent by early 2010, according to the median estimate in a Bloomberg survey earlier this month, will also limit demand. Economists and industry groups are among those projecting home sales will also cool in the absence of the $8,000 credit for first-time buyers, due to expire Nov. 30. Lawmakers are debating extending the credit.

The Standard & Poor’s Supercomposite Homebuilding Index has climbed 22 percent since the beginning of July on the improving outlook for housing, compared with a 16 percent increase in the S&P 500 index. The builder index fell yesterday on concern that the tax-credit program may not be extended.

‘Low Level’

“The residential housing market appears to have stabilized, but it has done so at a very low level,” William Foote, chief executive officer of USG Corp., North America’s largest maker of gypsum wallboard, said Oct. 21 on a conference call. The Chicago-based company posted its eighth straight net loss last quarter as sales dropped 32 percent from a year ago.

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The Association of Southeast Asian Nations said it is “on track” to achieve its goal of eliminating tariffs on most goods traded within the region by the beginning of 2010.

The group aims to form a free-trade area by Jan. 1 that would remove tariffs on more than 87 percent of imports, according to a statement by Southeast Asian leaders, who are meeting in Cha-Am, Thailand this weekend. Six of the bloc’s 10 members will implement the tariff eliminations, while the rest, which are less developed, will follow later.

Asean is attempting to create an economic zone modeled after the European Union, without a common currency, by 2015. The group has said it needs to improve its competitiveness as China and India, the world’s two fastest-growing major economies, attract an increasing chunk of global investment.

“The effective implementation of this major milestone in the free-trade area brings Asean closer to the Asean Economic Community where free flow of goods is one of its major objectives,” the statement said.

The Southeast Asian nations are also planning to open industries including transportation and financial services. Meanwhile the group’s plan to implement a free-trade agreement in goods may be delayed amid disputes among some nations.

Thailand and the Philippines are arguing over tariffs on rice imports. Thailand has threatened not to approve the Asean Trade in Goods Agreement if the Philippines doesn’t lower import tariffs on rice, the Bangkok Post reported Oct. 20, citing Nuntawan Sakuntanaga, head of the Trade Negotiations Department.

“We urge member states to resolve the differences at the earliest opportunity,” the leaders said today.

As well as Thailand and the Philippines, Asean’s members are Brunei, Cambodia, Indonesia, Laos, Malaysia, Myanmar, Singapore and Vietnam.

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German business confidence probably rose to a 13-month high in October, improving the outlook for growth in Europe’s largest economy.

The Ifo institute in Munich will say its business climate index, based on a survey of 7,000 executives, increased to 92 from 91.3 in September, according to the median of 40 forecasts in a Bloomberg survey of economists. That would be the highest reading since September last year. The index reached a 26-year low of 82.2 in March. Ifo releases the report at 10 a.m. today.

The German government last week increased its forecasts for the economy and now expects growth of 1.2 percent in 2010 after a contraction of 5 percent in 2009. With the recovery likely to be tempered by rising unemployment, the euro’s increase against the dollar and the expiry of stimulus measures, the European Central Bank is reluctant to tighten policy too soon.

“We expect relatively robust growth in the second half of this year as the economy bounces back from recession,” said Andreas Scheuerle, an economist at Dekabank in Frankfurt. “However, the recovery next year will be dull and bumpy.”

Ifo’s gauge of the current situation will increase to 88 while an index of executives’ expectations will advance to 96.2, according to the survey of economists.

Volkswagen AG, Europe’s biggest carmaker, predicts the worldwide automotive market won’t match pre-recession levels until 2013 at the earliest. “There are growing signs that the worst of the crisis may now be behind us, but it will take time for the markets to recover,” Chief Executive Officer Martin Winterkorn said on Oct. 8.

Fiscal Stimulus

Chancellor Angela Merkel’s government is trying to haul Germany out of its worst recession since World War II with about 85 billion euros ($127 billion) in stimulus measures. Her Christian Democrats are also prepared to cut taxes by 20 billion euros after they form a coalition with the country’s Liberal Democrats, negotiator Steffen Kampeter said on Oct. 16.

“The economy still is on a drip but will return to sustainable growth next year,” said Carsten Brzeski, an economist at ING Groep NV in Brussels, who expects overall output to expand by 2 percent in 2010. “We haven’t seen the election effect so far and the support measures taken are also designed to spur private investment.”

Economic data are mixed. While German factory orders rose for a sixth month in August and industrial output gained, exports unexpectedly fell. Investor confidence declined for the first time in three months in October amid concerns the recovery could falter.

The euro has appreciated 20 percent since mid-February and reached a 14-month high of $1.50 this week, eroding export returns. Rising joblessness may also discourage household spending.

The ECB has cut its benchmark rate to a record low of 1 percent and is lending banks as much money as they want for up to a year in an effort to get credit flowing through the economy of the 16 nations sharing the euro. President Jean-Claude Trichet has repeatedly said that it’s too early to withdraw monetary policy stimulus.

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Bank of England policy makers maintained consensus on the size of their bond-purchase plan this month, postponing a debate on the need for more spending until officials produce economic forecasts in November.

The nine-member Monetary Policy Committee, led by Governor Mervyn King, unanimously voted to keep the program at 175 billion pounds ($286 billion) and to leave the benchmark interest rate at a record low of 0.5 percent.

“There were differences of view among members of the committee on the balance of risks to the medium-term outlook for inflation and how it had shifted in recent months,” the minutes of the Oct. 8 meeting showed today in London. “All committee members, however, agreed that recent developments were not sufficiently compelling to justify revising the target level of asset purchases.”

King and David Miles had pushed for more spending in August, when forecasts showed that the inflation rate may not return to the 2 percent target in two years. King said yesterday that the outlook for consumer prices is volatile and that policy makers would look beyond the short term to determine how much spending the economy needs.

The pound extended gains against the euro and the dollar after the minutes were published. Britain’s currency rose 1.2 percent to 90.16 pence per euro as of 10:10 a.m. in London, and 1.3 percent to $1.6577.

November Forecasts

“The forecast round ahead of the November inflation report would provide an opportunity to assess more fully how the medium-term outlook for activity and inflation had evolved since August,” the minutes said payday loans with no fax.

The central bank should pause its bond-purchase program next month after Britain probably emerged from recession, the National Institute for Economic and Social Research said today. Gross domestic product will probably increase 0.7 percent in the last three months of the year, Niesr said.

While the U.K. economy may have returned to growth in the third quarter, policy makers have signaled that the recovery may be uneven. The statistics office will probably say Oct. 23 that the economy grew 0.2 percent in the July-September period, according to the median of 33 economists forecasts in a Bloomberg News survey.

Policy makers said that higher asset prices, lower short- term interest rates and the weakness of the pound would help economic growth in the future. London home sellers raised asking prices to a record high this month and led gains across the U.K., Rightmove Plc said Oct. 19.

The bond purchases had probably helped contribute to improvements including a narrowing of spreads, the minutes said.

“The evidence suggested that the effect on asset prices had been of the type that the committee had anticipated when it launched the program and had been substantial,” the minutes said. “The impact of the recent rises in asset prices would be to support spending, but only if sustained.”

The next policy decision is due on Nov. 5.

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U.S. consumers plan to spend 3.2 percent less this holiday season from a year ago as they shop for deals at discounters and buy fewer gifts for non-family members, according to a survey.

Shoppers plan to spend an average $682.74, compared with $705.01 last year, according to the National Retail Federation, a Washington-based trade group. Last year’s decline was 7.6 percent, compared with the 9 percent increase shoppers had projected going into that shopping season.

This will be the holiday season of “the serious bargain- hunter,” the trade group said in a statement today. The NRF reiterated its own prediction for a 1 percent decline in holiday sales, a forecast that is based on unemployment rates and retail sales.

Forty-three percent of respondents said discounts will be the most important factor in deciding where to shop, compared with 40 percent a year earlier. Seventy percent said they would shop at discounters, similar to the previous year.

Spending on family members will drop 2 percent, while for friends and co-workers, it will decline 17 percent and 15 percent, respectively, according to the survey.

U.S. holiday sales may decrease for the second year as consumers stick to budgets and retailers cut prices to encourage spending, the NRF said earlier this month.

Sales for the last two months of the year will probably fall 1 percent to $437.6 billion from the same period in 2008, the NRF forecast Oct. 6. That’s not as steep as last year’s decline of 3.4 percent, the first drop since the NRF started tracking holiday sales in 1995. The highest U.S. unemployment in 26 years, stagnant wage growth and wavering consumer confidence will reduce spending, the NRF said.

Today’s findings are based on a national survey of 8,431 adults contacted from Sept. 30 to Oct. 7. The survey has a margin of error of plus or minus 1 percent. It was conducted for the NRF by Worthington, Ohio-based BIGresearch LLC.

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The U.S. view that China is keeping its currency undervalued in order to boost exports will foster a “more contentious” relationship between the two nations, said Stephen Roach, chairman of Morgan Stanley Asia in Hong Kong.

The convergence of mounting U.S. unemployment and next year’s Congressional elections will make it easy for both Republicans and Democrats to criticize China, Roach said in a Bloomberg Television interview aired today in New York.

“It will get more contentious as we move into 2010,” he said. “There’ll be a lot of cries on both sides of the aisle to do something about the plight of the American worker. China is, unfortunately, the whipping boy in many of these discussions.”

The U.S. Treasury Department yesterday criticized China in a semiannual report to Congress, saying “the recent lack of flexibility of the renminbi exchange rate and China’s renewed accumulation of foreign-exchange reserves risk unwinding some of the progress made in reducing imbalances.” The Treasury stopped short of branding China a manipulator of its yuan, also known as the renminbi.

Roach, author of the newly released book “The Next Asia: Opportunities and Challenges for a New Globalization,” said the U.S. must think “long and hard” about its relationship with China, which has financed America’s appetite for consumer goods by buying Treasury securities.

Less Influence

China may “move outside the sphere of influence of the U.S.” as its domestic demand rises and exports become a smaller contributor to growth, he said. “The time will come when they are less reliant on us,” Roach said. “We still need an international lender of last resort. Who’s going to help us out, it’s a fair question.”

China needs to boost investment in social security, private pensions, and insurance for unemployment and medical care, Roach said, to prompt its consumers to save less and buy more goods from overseas.

“Until they can address that key issue, the development of a broad-based consumer culture is still too far out in time,” Roach said.

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Australian central bank Governor Glenn Stevens’s view that he can’t be “too timid” in raising borrowing costs is stoking speculation the benchmark interest rate will be increased next month by the most in a decade.

Experience “counsels against” an approach where policy makers who cut rates rapidly in response to a threat become “too timid to lessen that stimulus in a timely way when the threat has passed,” Stevens said in Perth yesterday.

The comments pushed Australia’s currency to a 14-month high and prompted investors to triple bets policy makers will increase the overnight cash rate target on Nov. 3 by half a percentage point to 3.75 percent. Stevens became the first Group of 20 central banker to increase borrowing costs when he unexpectedly boosted the rate last week by a quarter point.

“Stevens has put 50 basis-point moves on the table,” said Matthew Johnson, an interest-rate strategist at UBS AG in Sydney. “The safest time to raise rates quickly is when you know they are at the wrong level, and this is the first time a recession has ended with so little spare capacity.

“It’s not going to be long before the economy is running at full pelt again.”

Investors are certain Stevens will raise rates at least another quarter point next month as consumer confidence rises and unemployment falls, according to Bloomberg calculations based on interbank futures on the Sydney Futures Exchange. Chances of a half-point increase next month rose to 36 percent from 10 percent prior to Stevens’s speech and 2 percent on Oct. 14, the futures showed at 9:09 a.m. today.

Currency Rises

The Australian dollar rose to as high as 92.11 U.S. cents after yesterday’s speech, the strongest since August 2008, and traded at 92.09 cents at 9:20 a.m. in Sydney today. The two-year government bond yield jumped to 4.81 percent at 9:20 a.m. today from 4.63 percent before yesterday’s speech.

“I’ve said it consistently, interest rates will go up because they’ve been brought to emergency lows,” Prime Minister Kevin Rudd told Melbourne radio station 3AW today. “I don’t see any point whatsoever in trying to be cute with people about that.”

Stevens slashed borrowing costs by a record 4.25 percentage points between September 2008 and April to cushion the nation’s economy against the global financial crisis. His cuts included 1 percentage point reductions in October, December and February, the biggest moves since 1992.

‘Too Timid’

“If we were prepared to cut rates rapidly, to a very low level, in response to a threat but then were too timid to lessen that stimulus in a timely way when the threat had passed, we would have a bias in our monetary policy framework,” Stevens said. “Experience here and elsewhere counsels against that approach.”

“The governor has made it clear he’s keen to get rates back to normal quickly,” said RBS Group Australia Ltd. Chief Economist Kieran Davies, who is tipping a half-point increase next month. The last time Australian policy makers raised borrowing costs by that much was in February 2000.

Davies is the only one of 19 economists surveyed by Bloomberg after Stevens’s speech to tip a half point increase. Sixteen expect a quarter-point move and two predict no change.

Australia is only the second country after Israel to raise borrowing costs since the height of the global financial crisis. Israel isn’t a member of the G-20. U.S. Federal Reserve Chairman Ben S. Bernanke said last week he and his colleagues at the Fed “believe that accommodative policies will likely be warranted for an extended period.”

Other Asian central banks may follow Stevens in raising rates.

‘Tightening Wave’

“The region could be at the leading edge of the monetary tightening wave, though we believe the pace will be measured and modest,” Lee Heng Guie, chief economist at CIMB Investment Bank Bhd. in Kuala Lumpur, part of Malaysia’s second-largest banking group, said yesterday in a note to clients. “India and Korea will probably be the first among the Asian central banks to raise rates in the first half of 2010.”

Evidence is mounting that Australia’s economy, which skirted the global recession, is strengthening. Recent reports show consumer confidence rose this month to the highest level in more than two years, the jobless rate unexpectedly fell to 5.7 percent in September from 5.8 percent in August, the first drop in five months, and retail sales gained.

Gross domestic product rose 1 percent in the first half of this year as consumers increased spending after the government distributed more than A$20 billion ($18 billion) in cash to households. The government is spending another A$22 billion on roads, railways and schools.

“The period of greatest weakness in the Australian economy is probably past,” Stevens said yesterday. “Barring another serious international setback, the economy is likely to continue on a path of gradual expansion during 2010.”

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Confidence in the world economy rose for a third straight month in October as gains in manufacturing and equities added to signs of recovery, a Bloomberg survey of users on six continents showed.

The Bloomberg Professional Global Confidence Index increased to a record 61.7 from 58.54 in September. The index exceeded 50 for a third month, which means there were more optimists than pessimists.

“Conditions have reached a point of stability worldwide,” said Guy LeBas, chief economist and fixed-income strategist at Janney Montgomery Scott LLC in Philadelphia, who participated in the survey. “We’re seeing growth even in parts of the world that were looking dull earlier. The eurozone is coming out of the recession fairly quickly and in decent shape and the U.S. is improving.”

The global equity rally has added about $20 trillion to the value of stocks since this year’s low on March 9 as evidence mounts that the world economy is emerging from its deepest recession since the 1930s. The pace of the recovery may be tempered as stimulus measures undertaken by policy makers fade out and unemployment threatens to continue rising.

“Asset markets are rising and that’s having positive wealth effects and helping confidence come back a bit stronger,” said Robert Subbaraman, chief economist for Asia excluding Japan at Nomura International Ltd. in Hong Kong. “There are still problems with the world economy as a lot of the support is being fueled by loose policies which cannot be sustained.”

China Exports, Intel

Stocks rose today. The MSCI World Index climbed 0.9 percent to a one-year high as the decline in China’s exports slowed and Intel Corp.’s sales forecast topped analyst estimates. JPMorgan Chase & Co., the second-largest U.S. bank by assets, said profit in the third quarter soared almost sevenfold as fixed-income revenue surged.

Confidence may abate in the event that stocks erase part of their advance. The MSCI World Index has surged 67 percent since March 9, driving valuations on the gauge of 23 developed countries as high as 27.9 times annual earnings, data compiled by Bloomberg show. The Standard & Poor’s 500 Index is priced at 20.3 times profit, the highest level since 2004.

The survey of more than 1,400 Bloomberg users was conducted between Oct. 5 and Oct. 9. Since the previous survey, Group of 20 leaders vowed to keep stimulus measures until growth takes hold, the International Monetary Fund boosted its forecast for the global economy this year and next, and the Reserve Bank of Australia raised interest rates.

‘Gathering Steam’

Europe’s manufacturing and services industries expanded more than initially estimated last month, while some U.S. gauges of production are showing an acceleration in activity. India’s industrial production rose the most in 22 months in August, while China’s output gains were the fastest in almost a year.

“Investors think the recovery is gathering steam,” said Christopher Low, chief economist at FTN Financial in New York and a participant in the survey. “Manufacturing has shown the most improvement, and global trade is picking up.”

The world economy will contract 1.1 percent this year, and expand 3.1 percent in 2010, the Washington-based IMF said earlier this month.

Policy makers are debating the timing of the withdrawal of monetary and fiscal policies that have helped avert another Great Depression. Federal Reserve Chairman Ben S. Bernanke on Oct. 8 said the U.S. central bank is prepared to tighten monetary policy when the outlook for the economy “has improved sufficiently.”

Exit Strategies

New Zealand’s central bank is removing some of the liquidity facilities it put in place last year, while the Bank of Japan left its benchmark rate near zero today and refrained from saying if it would end its corporate debt purchase programs.

“The dynamic of the global recovery is very intense,” said Jose Carlos Diez, chief economist at Intermoney SA in Madrid. “If the central banks get nervous and put the brakes on too fast, that could abort the recovery.”

Bloomberg users in Spain are the most pessimistic on their economy as the nation remains mired in a recession even after France and Germany returned to growth. Spain’s index fell to a four-month low of 10 from 14.5 in September. The confidence gauge for western Europe rose to 44 from 43.2 last month.

Dollar Weakness

Confidence jumped the most in the Latin American region this month, with its index advancing to 72.9 from 65.5 in September. Brazil, the region’s biggest economy, is unwinding stimulus measures amid a resumption of growth as the central bank tightened rules for lenders to meet reserve requirements.

Sentiment fell in Japan, where a strengthening yen against the dollar is eating into company profits just as global demand stabilizes. The gauge for Japan declined to 38.8 from 48.8, while that for Asia rose to 76.2 from 73.6.

“In Asia, the biggest threat is the weakness in the dollar, because those economies are so dependent on exports to the U.S.,” Low of FTN Financial said.

The U.S. dollar may weaken further in the next six months against the world’s most actively traded currencies, as the survey showed sentiment near an 18-month low. The trade-weighted Dollar Index has fallen 7 percent this year, and gold, which usually moves inversely to the U.S. currency, is at a record. The dollar confidence index was 31.2 from 30.8 in September.

Users in Japan are less optimistic about the yen’s appreciation against the dollar, with the index falling to 56.9 from 62.1. Respondents in western Europe are still betting the euro will strengthen against its U.S. counterpart.

Stocks Sentiment Mixed

Bloomberg users were mixed on the outlook for their equity markets in the next six months. Respondents in the U.S., Japan and Spain expect shares to decline, while those in Brazil, Mexico and Italy predict their markets will extend their advances.

New York University Professor Nouriel Roubini, who predicted the financial crisis, on Oct. 3 said stock and commodity markets have gone up “too much, too soon, too fast” and may drop in the coming months as the gradual pace of the recovery disappoints investors.

Survey participants in the U.S., Europe and Latin America are also more confident short-term interest rates will rise in the next six months, the survey showed.

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