June 9 (Bloomberg) -- The euro strengthened and the dollar weakened on speculation the European Central Bank will signal more interest-rate increases today. U.S. stock-index futures advanced and oil gained.
The euro appreciated 0.3 percent against the dollar at 7:45 a.m. in New York. New Zealand’s currency climbed versus its 16 major peers. The yield on the Greek 10-year bond jumped 48 basis points, and Portuguese two-year yields increased 36 basis points. Futures on the Standard & Poor’s 500 Index advanced 0.4 percent and the Stoxx Europe 600 Index swung between gains and losses. The Shanghai Composite Index sank 1.7 percent. Crude oil rose 0.7 percent.
ECB President Jean-Claude Trichet may indicate today that policy makers will raise interest rates next month to contain inflation. New Zealand’s central bank said borrowing costs will need to increase in the next two years. Brazil lifted rates for a fourth straight meeting yesterday.
“A July rate-hike signal today is certainly what the financial markets are positioned for,” Derek Halpenny, European head of currency research at Bank of Tokyo-Mitsubishi UFJ Ltd. in London, wrote in a note. It will “also reinforce the credibility of the ECB that strives to highlight to the markets that its role is to deliver price stability, not solve the euro- zone debt crisis.”
Europe’s 17-nation currency advanced against 14 of its 16 most-traded counterparts, gaining 0.4 percent versus the yen. The ECB left its main refinancing rate at 1.25 percent, matching expectations from all 52 economists surveyed by Bloomberg.
Bank of England
The New Zealand dollar climbed 1.4 percent versus its U.S. counterpart after the central bank said commodity prices remain “very strong.” The pound rose 0.3 percent against the yen. The Bank of England kept its main rate at a record low of 0.5 percent. The Dollar Index, which tracks the currency against those of six U.S. trading partners, fell 0.2 percent.
The gain in S&P 500 futures indicated the U.S. benchmark gauge will rebound from the lowest in 2 1/2 months. A Labor Department report today may show initial claims for jobless benefits slid to 419,000 last week from 422,000, according to the median forecast of 49 economists in a Bloomberg survey.
The Stoxx 600 was little changed after falling yesterday for the sixth day. Home Retail Group Plc plunged 12 percent, the most in more than two years, after cutting its forecast for revenue at the Argos chain. Spain’s Banco de Valencia SA and Italy’s Mediobanca SpA led losses among banking shares.
Crude oil climbed 67 cents to $101.41 a barrel in New York. Wheat advanced 1.5 percent and cotton jumped 1 percent. U.S. Department of Agriculture reports may show declines in supplies, according to the median estimates of traders and analysts surveyed by Bloomberg News. Silver futures rose 0.9 percent.
Greece, Portugal
The extra yield investors demand to hold Greek 10-year bonds instead of benchmark German bunds increased 46 basis points, while the similar-maturity Portuguese-German spread widened to 722 basis points, the most since at least 1997, when Bloomberg began collecting the data.
The yield on the 30-year Treasury bond fell one basis point to 4.17 percent before the government sells $13 billion of the securities, the last of three auctions this week totaling $66 billion. The yield on the five-year Treasury note was little changed at 1.51 percent.
The MSCI Emerging Markets Index dropped 0.5 percent. The Shanghai Composite sank the most among equity gauges in the world’s 50 biggest markets to close at the lowest level since January on speculation the central bank will keep tightening monetary policy. South Korea’s Kospi Index retreated 0.6 percent before tomorrow’s central bank rate decision. PZU SA, Poland’s biggest insurer, led a 0.8 percent slump in the country’s benchmark WIG20 Index as the government began selling a stake of as much as 10 percent.
--With assistance from Claudia Carpenter, Michael Patterson, Andrew Rummer and Dan Tilles in London. Editors: Stephen Kirkland, Justin Carrigan
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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: Stuart Wallace at swallace@bloomberg.net
