Stocks dropped for fifth day and U.S. index futures erased gains amid concern Europe’s debt burden is worsening while the American recovery falters. The yen weakened after Japan said it will curb appreciation. The MSCI World Index fell 0.5 percent at 11:50 a.m. in London, and futures on the Standard & Poor’s 500 index slipped less than 0.1 percent. The yen depreciated 0.8 percent to 84.56 per dollar, after reaching a 15-year high yesterday. Irish 10- year bonds yield 332 basis points more than bunds, a record, and the cost of insuring Ireland’s debt against default rose. Ireland’s credit rating was cut one step by Standard & Poor’s to AA-, the lowest since 1995, on concern the rising cost of supporting the country’s struggling banks will swell the budget deficit. Sales of new homes in the U.S. probably held at a 330,000 annual pace in July, the second lowest on record, according to a Bloomberg survey before today’s report. Japanese Finance Minister Yoshihiko Noda pledged to take “appropriate action” to arrest the yen’s rally. “No one wants to take risks right now,” said Tomomi Yamashita, a fund manager at Shinkin Asset Management Co., which oversees $6 billion. “The effects of the stimulus measures are waning in the U.S., and fears about the global economic recovery are increasing. The market can’t help but be worried.” The Stoxx Europe 600 Index fell 0.3 percent, extending yesterday’s 1.7 percent slump. Tullow Oil Plc dropped 5.4 percent after warning of likely delays to its projects in Uganda. BHP Billiton Ltd., the world’s biggest mining company, gained 0.6 percent after reporting a doubling in second-half profit. The MSCI Asia Pacific Index sank 1.5 percent to its lowest level in five weeks. Durable Goods The decline in U.S. futures indicated the S&P 500 will extend yesterday’s 1.5 percent tumble to a seven-week low. Orders for long-lasting goods probably climbed 3 percent last month, the first gain in three months, economists said before a report from the Commerce Department due at 8:30 a.m. in Washington. The yen dropped against all 16 of its most-traded peers. The Bank of Japan is considering further monetary easing, the Nikkei newspaper said today, without citing where it got the information. Irish 10-year bond yields rose 13 basis points to 5.61 percent, while two-year yields jumped as much as 31 basis points, to 3.13 percent, the most since before the European Union and the International Monetary Fund announced a 750 billion euro bailout package to support monetary union. Irish Bonds Credit-default swaps protecting Irish debt climbed 6.5 basis points to 316.5, the highest since March 2009 and implying a 23.6 percent probability of default within five years, according to data provider CMA. Ireland plans to sell up to 600 million euros of bills tomorrow. Portugal issued 1.3 billion euros of bonds today. Allied Irish Banks Plc fell 1.8 percent, while Bank of Ireland Plc lost 2.3 percent. Portugal’s borrowing costs rose at today’s sale 629 million euros ($797 million) of bonds. The securities due in October 2016 were issued at an average yield of 4.371 percent, the country’s debt management agency said today. That compares with an average yield of 3.834 percent at a previous auction of six- year debt on Feb. 11, 2009. Treasuries Fall Treasuries fell for the first time in three days on concern five-year yields near the lowest level in 20 months will deter buyers at today’s debt auction. U.S. 10-year yields were two basis points higher at 2.51 percent after dropping below 2.5 percent yesterday for the first time since March 2009. Oil for October delivery in New York gained 0.2 percent to $72.15 a barrel in electronic trading on the New York Mercantile Exchange, before a government report forecast to show reduced U.S. gasoline stockpiles. Copper climbed 0.5 percent to $7,170 a metric ton on the London Metal Exchange. The Micex Index of shares in Russia, the world’s largest energy exporter, advanced 0.2 percent. MSCI Inc.’s gauge of Asian emerging-market shares lost 0.8 percent, the most in nine days, after a U.S. report yesterday showed sales of existing homes plunged by a record 27 percent in July. To contact the reporter on this story: Stephen Kirkland in London at skirkland@bloomberg.net

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