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U.S. Stock Futures Rise as China Eases Limit on Bank Investing

Dec. 5 (Bloomberg) -- U.S. stock futures advanced, indicating the Standard & Poor’s 500 Index will gain for the first time this week, as China eased restrictions on investing in banks and its new leaders backed urban development.

Facebook Inc. rose 1.8 percent as the world’s largest social-networking company will join the Nasdaq-100 Index next week. McMoRan Exploration Co. soared 45 percent after a report that Freeport-McMoRan Copper & Gold Inc., the largest publicly traded copper producer, is planning to buy the company. Cobalt International Energy Inc. surged 14 percent after announcing a “significant” oil discovery in the Gulf of Mexico.

S&P 500 futures expiring this month rose 0.3 percent to 1,409 at 8:34 a.m. New York time. Dow Jones Industrial Average futures added 47 points, or 0.4 percent, to 12,980. The number of shares changing hands in Stoxx Europe 600 Index’s companies was 48 percent above the 30-day average at this time of day, according to data compiled by Bloomberg.

“There are high expectations for China, so news of reform fans hopes of recovery,” said Kully Samra, who manages U.K. clients for Charles Schwab Corp. in London. “We’re all hanging our hats on China. It’s the new leadership that everyone’s looking to.” Charles Schwab oversees $1.8 trillion globally.

China’s regulators abolished a rule limiting insurers’ investments in commercial banks and Xinhua news agency said yesterday after a meeting of top party leaders that China will actively promote urbanization and expand domestic demand. U.S. companies added 118,000 workers in November, according to a private report based on payrolls. Service industries probably grew at a slower pace in November, economists predicted.

Tax Rates

U.S. stocks fell yesterday, sending the S&P 500 lower for a second straight day, after President Barack Obama held his ground about raising tax rates for the highest-income Americans.

Facebook gained 1.8 percent to $27.96. The operator of the social network with more than 1 billion users will replace Infosys Ltd. before the start of trading on Dec. 12, Nasdaq OMX Group Inc. said, about seven months after the company’s $16 billion IPO. The waiting period for entry into the index was a negotiating point with Facebook as it considered listing on Nasdaq or the New York Stock Exchange, a person with knowledge of the matter said in April.

McMoRan Exploration rose 45 percent to $12.28. The potential acquisition was reported in the Financial Times, citing unidentified people. Freeport slumped 8.6 percent to $35.

Cobalt jumped 14 percent to $27. The company announced the discovery at its North Platte prospect on Garden Banks Block 959 in deepwater Gulf of Mexico.

Nvidia Slumps

Nvidia Corp. slid 1.5 percent to $11.91. The maker of graphics processors was downgraded to market perform from outperform at Oppenheimer & Co. by equity analyst Richard Schafer.

Options to protect against losses in Costco Wholesale Corp. have slipped to the cheapest level in two years as traders bet shares of the largest U.S. warehouse club will extend gains from an all-time high amid rising profits.

Puts that pay should the shares fall 10 percent cost 5.35 points more than calls betting on a 10 percent rally, down from 8.94 in August 2011, according to three-month data compiled by Bloomberg. The price relationship known as skew reached the lowest since November 2010 last week. The stock has rallied 25 percent this year and closed at a record $104.59 on Dec. 3.

Store Visits

Chief Executive Officer Craig Jelinek has been keeping prices low to increase store visits amid an unemployment rate that’s stuck around 8 percent three years into the economic recovery. Costco, whose profit has climbed an average 16 percent in the past three fiscal years, last month announced a special dividend of $7 a share to return cash to investors.

“It’s a good business that still has ample room to grow,” Gary Bradshaw, a Dallas-based money manager at Hodges Capital Management Inc., which oversees about $800 million including Costco shares, said in a phone interview yesterday. “In tough times, people are more conscious about their spending. There is tremendous value at Costco. The special dividend shows management has confidence they will continue to grow earnings going forward.”

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