While you were sleeping: Citigroup soars, Madoff pleads guilty

Wednesday 11th March 2009

Citigroup, the bank that's lost 95% of its value in the past six months, soared after chief executive Vikram Pandit said the bank was profitable in the first two months of 2009, heading for the best quarter since 2007.

"I am most encouraged with the strength of our business so far in 2009," Pandit said, according to an internal memo.

The shares jumped 36% to US$1.43, leading a rally in financials that pushed the Dow Jones Industrial Average up more than 5%. Bank of America jumped 26% to US$4.74 and JPMorgan Chase climbed 21% to US$19.19.

Banks also advanced after Federal Reserve Chairman Ben Bernanke urged politicians and regulators to consider an overhaul of rules in the financial sector to limit the effects of boom and bust cycles.

"Governments around the world must continue to take forceful and, when appropriate, coordinated actions to restore financial market functioning and the flow of credit," Bernanke said in an address in Washington.

US Treasury Secretary Timothy Geithner said the US is in a deepening recession and the Obama administration will do all that is necessary to revive the world's biggest economy, according to an interview with Charlie Rose on PBS.

General Electric jumped 19% to US$8.81 after the sale of US$8 billion of government-guaranteed debt helped assuage concerns about its balance sheet.

The Dow climbed 331.26 to 6877.03 in late afternoon trading. The Standard & Poor's 500 Index jumped 5.6% to 714.66. The Nasdaq Composite surged 6.4% to 1350.24

Bernard Madoff's lawyer said the financier will plead guilty this week to fraud charges related to the largest Ponzi scheme in US history. The 11 charges include securities fraud, mail fraud, wire fraud, money laundering and filing false statements with the SEC. Madoff faces life imprisonment.

The US dollar declined against most major currencies after the Citigroup memo was obtained by media companies including Reuters and Bloomberg. Improved prospects for Citigroup helped lift investors' appetite for risk and reduced demand for the greenback as a haven.

The dollar fell to $1.2673 per euro from $1.2611. It traded at 98.71 yen from 98.84. The euro rose to 125.13 yen from 124.65.

Sales at US wholesalers fell 2.9% to US$326.1 billion in January, a three-year low, according to the Commerce Department.

Crude oil rose on speculation a US Energy Department report this week will show US stockpiles are shrinking, a sign that OPEC's production cuts may be helping to limit supplies.

US crude-oil supplies fell by 500,000 barrels last week, according to a Bloomberg survey. Crude oil for April rose as much as 2.4% to US$48.18 a barrel on the New York Mercantile Exchange.

Copper futures for May delivery rose 2.7% to US$1.6845 a pound in New York as stockpiles measured by the London Metal Exchange fell and traders speculated China is increasing imports of the metal.

Gold for April delivery fell 0.5% to US$913.90 an ounce on the New York Mercantile Exchange as the rally in stocks curbed demand for the precious metal as an alternative investment.

Citigroup optimism also helped stocks rally in Europe, with the Dow Jones Stoxx 600 Index jumping 5.1% to 165.99, the biggest gain in three months. BNP Paribas jumped 21% and Deutsche Bank climbed more than 12%. Insurance group Aegon led the 600 higher, surging 35%.

The FTSE 100 Index rose 4.9% to 3715.23, led by a 21%gain for Prudential and ICAP, and a 16% advance at Lloyds Banking Group.

Shares rose in London even after figures from the Royal Institution of Chartered Surveyors showed UK house sales dwindled to the lowest level since at least 1978. The survey of real estate agents and surveyors showed sales fell to 9.5% per respondent in the three months through February. The gauge of house prices fell in February to -78.3 from -76.6 in January.

Industrial production in the UK fell 2.9% in January from December, according to government figures.

In France, industrial output fell a greater-than-expected 3.1% that month. That wasn't enough to prevent French stocks from rallying. The CAC 40 climbed 5.7% to 2663.68. Axa jumped 20%, Renault fell 14% and Credit Agricole declined 11%.

In Germany, the DAX 30 rose 5.3% to 3886.98, led by Deutsche Bank. Commerzbank rose 15%, Daimler climbed 13% and Deutsche Post rose 11%.

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