BS: Euro Advances as Greek Concern Eases; U.S. Stocks Rebound
By Stephen Kirkland
June 7 (Bloomberg) -- The euro rose to a one-month high against the dollar as European Central Bank President Jean- Claude Trichet signaled he may back Greek debt rollovers. U.S. stocks rebounded after a five-week slump left the Standard & Poor’s 500 Index at its cheapest earnings valuation of 2011.
The euro appreciated 0.6 percent versus the dollar at 9:35 a.m. in New York after gaining as much as 0.7 percent to $1.4683, the highest level since May 5. The Standard & Poor’s 500 Index climbed 0.4 percent to 1,290.97, rebounding from a 2 1/2-month low, while the 10-year U.S. Treasury yield rose four basis points to 3.03 percent. Oil dropped amid speculation OPEC may increase output quotas.
The ECB isn’t opposed to private-sector creditors being asked to “maintain their level of outstanding credit,” Trichet said in Montreal yesterday, the first sign he endorsed measures to encourage investors to buy new Greek debt to replace maturing securities. Data indicating the U.S. economic recovery is losing steam helped erase more than $2.5 trillion from the market value of global equities since this year’s peak last month.
“The economic data of late from the U.S. has clearly shown that the soft patch continues, with a risk that the slowdown is deepening,” Derek Halpenny, European head of currency research at Bank of Tokyo-Mitsubishi UFJ Ltd. in London, wrote in a note. “The balance of data surprises clearly indicates that there has been ample reason for bad news to be now fully priced.”
The euro advanced 0.7 percent against the yen, appreciating versus 10 of its 16 most-traded peers. German Chancellor Angela Merkel told U.S. President Barack Obama yesterday that the 17- nation euro region will overcome its debt crisis.
Australia Rates
The Australian dollar slipped against 11 of its major counterparts after policy makers kept the nation’s benchmark interest rate unchanged for a sixth consecutive meeting and said current settings were appropriate.
The S&P 500 rebounded from the lowest close since March 18. The benchmark index of U.S. stocks was down 5.7 percent from an almost three-year high at the end of April through yesterday amid lower-than-estimated economic data. The slump has left the index trading at 12.2 times estimated profits of its companies, the cheapest forward valuation in 10 months.
International Paper Rallies
International Paper Co. made a $3.31 billion hostile bid for Temple-Inland Inc., sending the target’s shares up 41 percent. International Paper, the world’s largest pulp-and-paper maker, advanced 4.4 percent.
The Stoxx Europe 600 Index closed yesterday at the lowest in more than two months. Stora Enso Oyj, Europe’s biggest papermaker, jumped 1.5 percent after International Paper’s bid for Temple-Inland.
Mitchells & Butlers Plc rose 3.2 percent after the Daily Mail said the U.K. pub company may receive a takeover bid from a group including Irish entrepreneurs J.P. McManus and John Magnier, billionaire investor Joe Lewis and a private equity firm.
Oil fell to $98.49 a barrel after a delegate with knowledge of the matter said OPEC will decide to increase oil production targets when it meets tomorrow to help replace crude missing from Libya and fulfill forecast demand growth later this year. The S&P GSCI Index of 24 commodities slipped 0.1 percent.
The MSCI Emerging Markets Index rose 0.1 percent, after earlier falling more than 0.5 percent. Benchmark gauges in Russia and Poland advanced more than 1 percent. South Korea’s Kospi index dropped 0.7 percent and the won weakened against all 16 major peers as the nation’s financial markets traded for the first time since a June 3 report showed slower-than-expected growth in U.S. payrolls. Thailand’s SET Index lost 1.1 percent after Goldman Sachs Group Inc. lowered its rating on the country’s stocks.
The yield on the five-year Treasury note climbed two basis points before the U.S. sells $32 billion of three-year securities, the first of three auctions this week totaling $66 billion.
--With assistance from Shiyin Chen in Singapore, Sharon Lindores, Abigail Moses, Michael Patterson, Andrew Rummer, Dan Tilles in London. Editor: Michael P. Regan
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To contact the reporter on this story: Stephen Kirkland in London at skirkland@bloomberg.net.
To contact the editor responsible for this story: Justin Carrigan at jcarrigan@bloomberg.net
