BLBG: Euro Strengthens on Greek Bailout Prospects; Commodities Gain
By David Merritt
April 30 (Bloomberg) -- The euro strengthened and stocks in Spain, Italy and Portugal advanced on speculation European aid for debt-stricken Greece is imminent. Crude oil and copper rose.
The euro strengthened against 13 of 16 of its most-traded counterparts at 12:17 p.m. in London and futures on the Standard & Poor’s 500 Index gained 0.1 percent. Greece’s ASE Index climbed for a third day and Portugal’s PSI-20 Index added 0.8 percent. The cost of credit-default swaps to protect against Greece reneging on its debt agreements fell 32 basis points to 638, after jumping to a record this week, according to CMA DataVision prices. Oil surpassed $86 for the first time in two weeks and copper rose for the first time in four days.
European Commission President Jose Barroso said today that he is confident a rescue package for the Greek government will be completed “in days,” easing investor concern that the nation may default. The U.S. economy probably expanded in the first quarter, capping the biggest six-month gain since 2003, as consumers spent more freely, economists said before a government report today. “The market appears willing to give Europe’s policymakers, at least for now, the benefit of the doubt over the aid package to be offered to Greece,” said Stuart Bennett, a senior foreign-exchange strategist at Credit Agricole Corporate and Investment Bank in London. “A failure to iron out the details of the plan by early next week could provide a catalyst for another move lower” for the euro, he said.
Banking Revenue
The MSCI World Index of 23 developed nations’ stocks rose 0.2 percent. National Bank of Greece SA, the nation’s largest lender, rallied 2.6 percent in Athens, extending yesterday’s 18 percent surge. Banco Comercial Portugues SA climbed 4.2 percent in Lisbon. Banco Santander SA advanced 2 percent in Madrid. Gains were limited as Barclays Plc, the U.K.’s third-biggest bank by assets, slumped 4.5 percent in London after investment banking revenue dropped more than forecast. Italy’s benchmark FTSE MIB Index added 0.5 percent.
The MSCI Asia Pacific Index climbed 0.9 percent, its first gain in four days. Samsung Electronics Co. Ltd. added 2.9 percent in Seoul after reporting record net income. Baoshan Iron & Steel Co. Ltd., China’s largest publicly traded steelmaker, gained 6 percent in Shanghai after saying its profit may surge 10-fold. Macquarie Group Ltd., Australia’s largest investment bank, rose 4 percent as earnings doubled.
The MSCI Emerging Markets Index climbed 0.8 percent, led by a 1.3 percent jump in Poland’s benchmark WIG20 Index as insurer PZU SA raised 8.1 billion-zloty ($2.7 billion) in Europe’s biggest initial public offering since 2007. Emerging-market equity funds attracted $1.5 billion of net inflows in a week, taking year-to-date gains to $15.2 billion, EPFR Global said.
U.S. Futures
U.S. futures were little changed after the S&P 500 yesterday rose the most in almost two months. First-quarter gross domestic product growth may show a 3.3 percent expansion, according to a Bloomberg survey of 85 economists before a report from the Commerce Department due at 8:30 a.m. in Washington.
About 82 percent of companies in the S&P 500 that reported quarterly results since April 12 beat analysts’ estimates for per-share earnings, according to Bloomberg data. Chevron Corp. and Constellation Energy Group Inc. are among companies scheduled to announce results today.
The euro rose for the third consecutive day against the dollar and the yen, climbing 0.6 percent to $1.3318 and 1.2 percent to 125.92 yen. The Japanese currency dropped against all 16 of its most-traded peers, slipping 0.6 percent to 94.55 against the dollar.
Swiss Franc
The Swiss franc was weaker against the euro after central bank Chairman Philipp Hildebrand said policy makers are “acting decisively to prevent an excessive appreciation” of the currency. The franc depreciated as much as 0.1 percent to 1.4356 per euro, before trading at 1.4339.
The yield on the Greek 10-year bond dropped 43 basis points to 9.38 percent, extending yesterday’s 69 basis points decline. Credit-default swaps tied to Spain’s government bonds fell 8 basis points to 162, Portugal dropped 27 basis points to 271 and Italy declined 7.5 basis points to 138, CMA prices show. A decline in the price of the contracts signals an improvement in investor perceptions of credit quality.
Prime Minister George Papandreou is starting his sales pitch to the Greek people as unions denounce “unjust” budget cuts linked to a potential $159 billion European Union-led bailout. Greek officials aim to reach an agreement with the EU and the International Monetary Fund in coming days on budget cuts that may be worth 24 billion euros ($32 billion).
Crude added as much as 1.1 percent to $86.13 a barrel in New York trading, for a third consecutive advance. Copper for delivery in three months rose 1.1 percent to $7,437 a metric ton on the London Metal Exchange. Aluminum gained for a third day, adding 1.4 percent to $2,230.25 a ton. Nickel, zinc and tin also rose. Gold for immediate delivery jumped as much as 0.8 percent to $1,175.60 an ounce, the highest since December.
To contact the reporter on this story: David Merritt in London on dmerritt1@bloomberg.net
