U.S. stocks advanced, a day after the Standard & Poor’s 500 Index rallied to a seven-month high, as Greek political leaders struck a deal on a package of austerity measures needed to secure international rescue funds.

The S&P 500 rose 0.2 percent to 1,352.03 at 9:31 a.m. New York time.

“It looks like Greece is on a path to address its issues,” Michael Finnegan, chief investment officer at Principal Funds Inc. in Des Moines, Iowa, said in a telephone interview. His firm oversees $62.9 billion. “Everybody realizes what needs to get done. Obviously there are political challenges, but the consequences if they don’t are just too severe.”

Stock-futures reversed losses as European Central Bank President Mario Draghi said Greek Prime Minister Lucas Papademos told him that “an agreement has been reached.” That may pave the way for a private sector deal to write off 70 percent of the value of Greek bonds held by private investors, or about 100 billion euros. Both are key steps toward avoiding default and ending the debt crisis. In the U.S., jobless claims unexpectedly declined last week.

Equities rose yesterday as the MSCI All-Country World Index gained 20 percent from its October low, meeting the definition of a bull market. The S&P 500 yesterday closed 1 percent away from its peak nine months ago of 1,363.61, which was the highest level since June 2008. The index has risen 7.3 percent this year amid better-than-expected economic data and corporate profits.

Warren Buffett, the billionaire chairman of Berkshire Hathaway Inc., said low interest rates and inflation should dissuade investors from buying bonds and other holdings tied to currencies.

“They are among the most dangerous of assets,” Buffett said in an adaptation of his annual letter to shareholders that appeared today on Fortune magazine’s website. “Over the past century these instruments have destroyed the purchasing power of investors in many countries, even as these holders continued to receive timely payments of interest and principal.”

Buffett, 81, who built Omaha, Nebraska-based Berkshire from a failing textile maker into a firm selling insurance, energy and jewelry through acquisitions and stock picks, echoes Laurence D. Fink, chief executive officer of BlackRock Inc. Fink said this week that investors should be 100 percent in equities, because of depressed stock valuations and the Federal Reserve’s pledge to keep interest rates low.

As global stocks return to a bull market, the losers in the U.S. are companies least tied to economic growth.

For the first time since 1999, S&P 500 utilities, phone companies and providers of consumer staples posted the only monthly losses, slumping at least 1.5 percent with dividends in January, and continued to lag behind this month. It’s a reversal from 2011, when the three defensive industries returned more than 6.3 percent as investors embraced stocks thought to do well during a slowdown.

“Last year, investors tended to hide in things which are stable, paying reasonable dividends,” said Sudhir Nanda, a money manager and head of the quantitative equity group at T. Rowe Price Group Inc. in Baltimore, which oversees $489.5 billion. “This year, people looked at the U.S. and said, ‘Things are not really that bad.’ If the economy is humming, people tend to buy more of the sectors which will profit from growth, industrials, materials and things like that.”

To contact the reporter on this story: Rita Nazareth in New York at rnazareth@bloomberg.net

(Blomberg)