Global stocks rebound from earlier declines

Global stocks rebounded in the third quarter from first-half declines as US and European companies' profits surpassed forecasts, suggesting they can withstand record energy prices.

''Stocks have a good dynamic going," said Jerome Forneris, who helps manage the equivalent of $7.3 billion at Banque Martin Maurel in Marseille. ''Earnings have been strong and better than expected."

Morgan Stanley Capital International's World index advanced 6.4 percent for the quarter through Thursday, and all 10 of its industry groups gained. The benchmark for stocks in 23 developed markets dropped in the first and second quarters, resulting in a 1.8 percent loss through June 30.

Energy companies were this quarter's best performers as crude oil, gasoline, and natural gas prices reached record highs. Oil producers, including OMV AG, rallied along with refiners such as Valero Energy Corp. and oilfield-service providers including Halliburton Co.

Demand for oil and gas stocks propelled the Russian Trading System index to a 40 percent advance in dollar terms, the largest among 79 indexes that Bloomberg News tracks worldwide. Russia is the world's number two oil supplier.

The surge in Russia and rallies in countries such as South Korea helped emerging markets outperform developed markets for the ninth time in 10 quarters. The MSCI Emerging Markets Index gained 16 percent.

Eastern European markets also rallied, reflecting an export-driven acceleration of economic growth across the region. The Czech Republic's PX-50 Index added 21 percent, Hungary's BUX gained 22 percent, and Poland's WIG 20 increased 25 percent.

Japan was a leader among developed markets as the economy revived. The Nikkei 225 Stock Average advanced 15 percent and the Topix index added 19 percent. Toyota Motor Corp., Japan's biggest company by market value, soared 34 percent.

Stocks in two energy-producing nations, Canada and Norway, kept pace with those in Japan, which imports almost all its oil. Canada's S&P/TSX Composite Index rallied 17 percent and Norway's OBX Index rose 16 percent.

Gains in Western Europe were smaller as increased energy costs slowed economic growth. The International Monetary Fund reduced its 2005 forecast for the 12 countries that share the euro for the third time this year, to 1.2 percent, on Sept. 21.

US stocks were among the quarter's laggards as hurricanes Katrina and Rita limited energy production in the Gulf of Mexico, which accounts for about 30 percent of the country's oil output and 24 percent of its gas supply.

The Standard & Poor's 500 added 3.1 percent, leaving the benchmark up 1.3 percent for the year. The Dow Jones industrial average rose 2.7 percent and the Nasdaq Composite index climbed 4.1 percent, not enough to recoup their first-half declines.