The euro rose toward a one-month high against the dollar after European Central Bank President Jean- Claude Trichet indicated his willingness to sanction bond rollovers in Greece. Asian commodity stocks declined as copper snapped a two-day rally and oil fell before OPEC meets tomorrow.
The euro climbed 0.3 percent to $1.4612 as of 3 p.m. in Tokyo. The Australian dollar reversed gains after the central bank left interest rates unchanged. Gauges of materials and energy stocks the biggest drags on the MSCI Asia Pacific Index, which was little changed. Standard & Poor’s 500 Index futures added 0.3 percent, following a four-day slump in the measure. Euro Stoxx 50 Index futures slipped 0.5 percent. Copper sank 0.5 percent in London. Crude decreased 0.4 percent in New York.
Trichet gave his first signal endorsing measures to encourage investors to buy new Greek bonds to replace maturing securities as officials seek to stem the nation’s debt crisis. Global shares have lost more than $2.5 trillion in market value since this year’s peak on May 1 as data indicated the U.S. economic recovery is losing steam at a time when developing nations are raising interest rates to counter inflation.
“All we are really seeing is a short-term flare-up followed by resolution, and that’s been a process we’ve seen for a while now,” said Adam Carr, a senior economist in Sydney at ICAP Australia Ltd., a unit of the world’s largest interdealer broker. “We are close to the phase of resolution, and I would imagine that would be a good point to see the euro push higher.”
Greek Funding
The euro climbed 0.5 percent to 117.36 yen. It reached $1.4658 yesterday, the highest level since May 5. While Trichet opposed imposing losses on creditors, he said the ECB is not opposed to private-sector creditors being asked to “maintain their level of outstanding credit,” he said in Montreal yesterday. “That is not a default. That is something the European Central Bank would consider appropriate.”
The ECB is considering a rollover of bonds as an alternative means of easing Greece’s funding squeeze, two officials familiar with the matter said last week on condition of anonymity.
The Aussie fell 0.3 percent to $1.0678 after earlier climbing as much as 0.3 percent. The Reserve Bank of Australia left its benchmark interest rate unchanged today, a decision forecast by 23 of 28 economists surveyed by Bloomberg News. Central bank Governor Glenn Stevens said the decision reflects “softened” prices for raw materials and an unemployment rate that’s been little changed near 5 percent.
MSCI’s Asia Pacific Index was little changed after dropping 2.4 percent in the last three trading days. Hong Kong’s Hang Seng Index fell 0.4 percent, South Korea’s Kospi index slid 0.7 percent, Taiwan’s Taiex index rose 0.1 percent and the Shanghai Composite Index gained 0.4 percent. Financial markets were closed yesterday for holidays in the four places.
Utilities, Refiners
Japan’s Nikkei 225 Stock Average climbed 0.7 percent, led by utilities after Chief Cabinet Secretary Yukio Edano said a liquidation of Tokyo Electric Power Co. must be avoided. Shares of the operator of the damaged Fukushima nuclear plant rose 4.4 percent, rebounding from a 28 percent plunge yesterday.
GS Holdings (078930) Corp. plunged 6.1 percent in Seoul, leading losses among Korean refiners. Woodside Petroleum Ltd. slid 1.2 percent in Sydney and Korea Zinc Co. lost 1.4 percent in Seoul.
Crude for July delivery declined 0.4 percent to $98.59 a barrel in electronic trading on the New York Mercantile Exchange. Futures dropped for a third day before Organization of Petroleum Exporting Countries ministers meet in Vienna tomorrow. OPEC may increase production limits, Barclays Plc said yesterday. A Bloomberg survey of 30 analysts conducted May 24-31 showed output targets will probably be left unchanged.
Copper Drops
Copper for three month delivery fell as much as 0.7 percent to $9,068.50 a metric ton on the London Metal Exchange, before trading at $9,083.50. Lead slid 0.7 percent to $2,485 per ton, snapping a two-day, 4 percent rally. Zinc decreased 0.2 percent to $2,268.50, also halting a two-day advance.
The S&P 500 fell 1.1 percent yesterday, extending last week’s 2.3 percent plunge. Financial shares including Citigroup Inc. and Bank of America Corp. were the biggest drags amid concern economic growth is slowing and the Federal Reserve will boost capital requirements for the nation’s largest banks.
General Electric Co. (GE) and Capital One Financial Corp. (COF) may be active after people with direct knowledge of the matter said the two companies submitted bids of ING Groep NV’s U.S. online bank last week in a sale that may raise about $9 billion. Temple- Inland Inc. jumped in extended trading after International Paper Co. (IP), the world’s largest pulp-and-paper maker, made a $3.31 billion hostile takeover bid for the company.
“There’s going to be a lot of volatility during the summer,” Kirk Hartman, chief investment officer of Wells Capital Management, said in a Bloomberg Television interview from Los Angeles. “There are great buying opportunities on the dips. The issue is confidence.”
To contact the reporters on this story: Shiyin Chen in Singapore at schen37@bloomberg.net; Kristine Aquino in Singapore at kaquino1@bloomberg.net.
To contact the editor responsible for this story: James Regan at jregan19@bloomberg.net
