BLBG: Stocks Fall for Sixth Day, U.S. Futures Slide as Euro Weakens
By David Merritt
May 20 (Bloomberg) -- Stocks slid for a sixth day and U.S. index futures declined as the euro weakened against the dollar. Oil fell and palladium extended its losing streak to the worst since July.
The MSCI World Index of 23 developed nations’ stocks fell 0.5 percent at 11:45 a.m. in London for its longest losing streak in four months. The Stoxx Europe 600 Index dropped 0.5 percent and futures on the Standard & Poor’s 500 Index retreated 0.6 percent. The euro weakened against the dollar, trading near the lowest level in four years. Palladium lost 7.5 percent, extending its six-day slump to 22 percent.
European finance officials meet in Brussels a day before the German parliament votes on the country’s share of a $1 trillion bailout to backstop the euro in the wake of a worsening sovereign debt crisis. Stocks plunged yesterday as Chancellor Angela Merkel’s unilateral effort to control what she called “destructive” markets rattled investors. The German ban on some bearish bets against financial companies and government bonds wasn’t replicated in other European states.
“My major concern in Europe is that in order for the zone to start kicking in you need to see some serious austerity,” said Jonathan Plant, a strategist at Liberum Capital Ltd. in London. “It goes back to whether stocks are cheap, and they are just not cheap enough for me.”
More than two stocks fell for every one that gained on the Stoxx 600. Yesterday’s 3 percent plunge left the benchmark gauge trading at less than 15 times its companies’ reported earnings, near the lowest level since December 2008. National Grid Plc, the operator of the U.K.’s power and gas networks, slumped 7.5 percent in London after announcing a 3.2 billion-pound ($4.6 billion) rights issue. SABMiller Plc, the world’s second-largest brewer, tumbled 6.2 percent as earnings missed estimates.
Dubai Restructuring
The MSCI Emerging Markets Index fell 1.4 percent as China’s Shanghai Composite Index slipped 1.2 percent, Russia’s Micex Index dropped 1.4 percent and Turkey’s ISE National 100 Index lost 3 percent. Dubai’s DFM General Index climbed 0.4 percent after creditors of Dubai World agreed to restructure $23.5 billion of liabilities as the state-owned holding company seeks to resolve a debt crisis that roiled global markets last year.
The decline in U.S. futures indicated the S&P 500 will extend its 0.5 percent decline yesterday, when it wiped out its gain for 2010. The Federal Reserve said it was in no hurry to sell mortgage assets as it raised its U.S. growth estimates for 2010 and lowered forecasts for unemployment and inflation, according to minutes of the Federal Open Market Committee meeting on April 27-28 released yesterday.
Palladium Retreat
The U.S. Conference Board’s measure of the economy’s outlook for the next three to six months probably climbed 0.2 percent last month, according to the median forecast in a Bloomberg survey of economists. The figures, due at 10:00 a.m. New York time, follow a 1.4 percent gain in March that was the most since a similar rise in May 2009. The Fed Bank of Philadelphia’s general economic index and initial jobless claims data are also due to be released today.
Palladium, used in auto catalysts and jewelry, retreated $35.63 to $424.00 an ounce on concern that slower economic growth will sap demand for cars and consumer goods. Palladium had advanced as much as 39 percent this year, after more than doubling last year, as auto sales expanded and an exchange- traded fund backed by the metal was introduced. Platinum dropped 4 percent to $1,537.25 an ounce.
Copper for delivery in three months fell as much as $1.03, or 1.5 percent to $68.84 in electronic trading on the New York Mercantile Exchange.
Spanish Auction
The euro weakened 0.7 percent to $1.2333, near the lowest level since April 17, 2006. The yield on German 10-year bunds, Europe’s benchmark debt security, climbed to 2.75 percent.
Spain sold 10-year bonds to yield 4.045 percent. That’s higher than the 3.855 percent yield at an auction two months ago and compares with an average of 3.869 percent at the previous four sales.
The cost of protecting against a default on European corporate bonds rose, with credit-default swaps on the Markit iTraxx Crossover Index of 50 mostly high-yield companies climbing 8.7 basis points to 582.2, according to Markit Group Ltd.
To contact the reporter on this story: David Merritt in London on dmerritt1@bloomberg.net
