The pound, U.K. government bonds and corporate debt fell after Chancellor of the Exchequer Alistair Darling said Britain’s recession is worsening. The yen rose against all 16 most-traded currencies. The U.K. currency weakened versus the yen, dollar, euro and Swiss franc. Yields on 10-year gilts rose eight basis points to 3.39 percent. The yen advanced after Japan posted an unexpected trade surplus in March. European stocks fluctuated as worse- than-estimated earnings from GlaxoSmithKline Plc and Heineken NV offset a rally by Electrolux AB, which said it sees “early signs” the market slump is leveling off. U.S. futures fell. Prime Minister Gordon Brown’s government is boosting spending and borrowing to bail out banks that have posted $121 billion of losses and writedowns since the start of 2007. The economy will shrink 3.5 percent this year, Darling said in his budget speech to Parliament today, deeper than his previous forecast of 1.25 percent. 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 0.4 percent to 191.03, reversing a decline of as much as 0.6 percent. Standard & Poor’s 500 Index futures slipped 0.5 percent after the benchmark index for U.S. stocks rallied 2.1 percent yesterday. The MSCI Asia Pacific Index fell 0.1 percent. Yen Rises The yen rose 0.9 percent to 97.87 per dollar. Japanese exports fell 45.6 percent from a year earlier, compared with February’s unprecedented 49.4 percent plunge, the Finance Ministry said today in Tokyo. Economists predicted a 46.4 percent decline. 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. ‘Market Fearful’ The pound fell 0.2 percent to $1.4627. The British currency weakened 1.1 percent against the yen, 0.2 percent versus the dollar and 0.2 percent versus the euro. “The market is fearful that the budget will cause indigestion,” said Brian Hilliard, chief economist at Societe Generale SA in London. “I don’t believe it’s going to be a surprise, but people react nervously ahead of these bits of news.” U.K. company bonds dropped 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. Industrial metals on the London Metal Exchange fell, with copper posting its longest losing streak in almost 10 weeks, on concern the global recession will sap demand. Copper for delivery in three months declined $42, or 0.9 percent, to $4,465 a metric ton. Aluminum, nickel, zinc and tin also retreated. Crude oil for June delivery dropped 1 cent to $48.54 a barrel in electronic trading on the New York Mercantile Exchange. Gold for immediate delivery rose 45 cents, or 0.1 percent, to $884.25 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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