The pound, U.K. government bonds and corporate debt fell on concern Chancellor of the Exchequer Alistair Darling’s budget today will show Britain’s recession is worsening. Industrial metals fell, with copper posting its longest losing streak in almost 10 weeks. The British currency weakened against the yen, dollar, euro and Swiss franc. Yields on 10-year gilts rose five basis points to 3.36 percent. Copper dropped 1.7 percent, declining for a third day. European stocks fluctuated between gains and losses as banks advanced, offsetting worse-than-forecast earnings from Capital One Financial Corp. and Nestle SA. U.S. futures fell. Prime Minister Gordon Brown’s government is increasing spending and borrowing to bail out banks that have reported $121 billion of losses and writedowns since the start of 2007. Gross domestic product will contract 3.7 percent this year, the Organization for Economic Cooperation and Development said March 31. The U.K. jobless rate rose to 6.7 percent in the three months through February, the highest level since the Labour Party came to power in 1997, data showed today. “The allure of the gilt market has waned quite dramatically,” said Andre de Silva, global deputy head of fixed-income strategy in London at HSBC Holdings Plc. “The banking sector is five times the size of the U.K. economy, and the U.K. has been affected by the financial crisis more than many of its peers.” Europe’s Dow Jones Stoxx 600 Index added 0.3 percent to 190.83, reversing a decline of as much as 0.6 percent. Standard & Poor’s 500 Index futures slipped 0.6 percent after the benchmark index for U.S. stocks rallied 2.1 percent yesterday. The MSCI Asia Pacific Index sank 0.3 percent. Yen Rises The yen rose against all 16 of the most-active currencies on speculation stress tests for the largest U.S. banks will show additional loan losses. The dollar weakened 0.7 percent against the yen after a Japanese government report showed an unexpected trade surplus in March. Ten-year gilts led government notes lower amid concern Britain’s deficit this year will jump to 160 billion pounds ($232 billion), or 11 percent of gross domestic product, according to a survey of 24 economists by the Treasury. Bond sales may reach 180 billion pounds in the year through March 31, a Bloomberg survey of banks showed. Darling will deliver the budget to Parliament at 12:30 p.m. in London. ‘Selling Pressure’ The pound fell to $1.4575 as of 10:44 a.m. in London, from $1.4673 yesterday. The British currency weakened 1.4 percent against the yen, 0.7 percent versus the dollar and 0.6 percent versus the euro “Gilts were under selling pressure ahead of today’s budget announcement,” said Luca Cazzulani, a Milan-based fixed-income strategist at UniCredit Markets & Investment Banking. “The spring budget will confirm a further worsening of the U.K. outlook and the deterioration of U.K. public finance.” U.K. company bonds fell for a second day, with the iBoxx Sterling Corporate index declining to 75.58, from a one-month high of 75.72 yesterday, according to data compiled by Bloomberg. The iBoxx Sterling Non-Financial index, which excludes bonds sold by banks, slipped 0.5 percent to 93.84, the lowest level this week. Copper led declines on the London Metal Exchange on concern the global recession will sap demand. Copper for delivery in three months fell $98, or 2.2 percent, to $4,409 a metric ton. Aluminum, nickel, zinc and tin also retreated. Crude oil for June delivery gained 17 cents, or 0.4 percent, to $48.72 a barrel in electronic trading on the New York Mercantile Exchange. Gold for immediate delivery rose $1.50, or 0.2 percent, to $885.30 an ounce in London. “We’re finding a bottom in gold and a top in stock markets,” said Mario Innecco, a futures broker at MF Global Ltd. in London.

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