June 27 (Bloomberg) -- Bonds of Europe’s most-indebted nations fell and debt-insurance costs jumped to records before Greek lawmakers started debating spending cuts. Commodities dropped, while U.S. stock-index futures climbed. Portugal and Ireland’s 10-year bond yields advanced 24 and 10 basis points, respectively, to records as of 8:37 a.m. in New York, while the Markit iTraxx SovX Western Europe Index of credit-default swaps rose to an all-time high. The Standard & Poor’s GSCI index of 24 commodities fell 0.7 percent after reaching the lowest level in five months. S&P 500 futures increased 0.1 percent. Greek lawmakers are starting a three-day debate to approve a 78 billion-euro ($110 billion) austerity package needed for the release of the next phase of an international bailout. The nation’s creditors are headed toward an agreement to roll over 70 percent of their holdings into longer-maturity debt in an effort to prevent a default that may roil the euro region. “Another week where all eyes will be on Greek politicians as they gather to debate the latest austerity package that’s needed to ensure that funds are made available to avoid a default within the next few weeks,” Gary Jenkins, head of fixed-income at Evolution Securities Ltd. in London, wrote in a client note. “Or at least, that’s the threat.” Greek, Portuguese and Irish 10-year bonds declined, driving up the extra yield investors demand to hold the securities instead of benchmark German bunds. The Portuguese-German spread widened 22 basis points to a record and the Irish-bund gap jumped to a euro-era high. The Italian 10-year bond yield rose above 5 percent for the first time since March 10. Default Swaps The Markit iTraxx SovX WE gauge of default swaps on 15 governments rose 5.5 basis points to 247.5, after earlier reaching a record, and contracts tied to Greece climbed 23 basis points to 2,138, signaling an 84 percent probability of default within five years, according to CMA. Swaps insuring Irish bonds added 27 basis points to an all-time high 832 and Portugal increased 21 to a record 859. Cotton fell 3.2 percent, leading commodities lower. Silver dropped 2.2 percent and Brent crude slipped 0.9 percent to $104.17 a barrel and dropped to the lowest level since Feb. 18. U.S. stock futures maintained gains, indicating the S&P 500 may end its three-day losing streak, after consumer spending unexpectedly stagnated in May. Purchases were little changed, the weakest outcome since June 2010, after a revised 0.3 percent gain the prior month that was smaller than previously estimated, U.S. Commerce Department figures showed today. The median of economists surveyed by Bloomberg News called for a 0.1 percent gain. Prices excluding food and energy rose more than forecast. Akzo, Securitas Akzo Nobel NV tumbled 7.8 percent after the world’s biggest paint maker said it will report an unexpected drop in profit. Securitas AB, the world’s largest guarding company, climbed 4.4 percent as Stanley Black & Decker Inc. topped its takeover offer for Niscayah AB. The U.S. dollar gained 0.5 percent versus the yen. New Zealand’s dollar declined 1 percent versus the U.S. currency after a government report showed the nation’s trade surplus narrowed by more than economists forecast last month. Germany’s biggest banks and insurers are considering the proposal to roll over Greek debt holdings, a person familiar with the matter said today. “We’ve been working on this,” and hope other countries will join, French President Nicolas Sarkozy said at a press conference in Paris. Capital Requirements The latest move to stem the sovereign debt crisis comes after the Basel Committee on Banking Supervision took steps this weekend to force banks to hold more capital to protect against a re-run of the worst financial crisis since the Great Depression. Yields on 10-year Treasuries rose 1 basis point to 2.88 percent and five-year yields gained two basis points to 1.40 percent. The MSCI Emerging Markets Index dropped 0.6 percent. Russia’s Micex Index fell 1 percent as OAO Lukoil retreated. The Shanghai Composite Index rose 0.4 percent to the highest in a month after a cash shortage in China’s financial system eased and the nation’s biggest brokerages said equities are poised to rally. The Bombay Stock Exchange Sensitive Index climbed 0.9 percent as lower commodity prices reduced inflation concerns and Nomura Holdings Inc. recommended Indian stocks. --With assistance from Dan Tilles, Michael Patterson, Andrew Rummer, Claudia Carpenter and Abigail Moses in London and Shiyin Chen in Singapore. Editors: Paul Sillitoe, Nick Baker To contact the reporter on this story: Paul Armstrong in London at parmstrong10@bloomberg.net To contact the editor responsible for this story: Justin Carrigan at jcarrigan@bloomberg.net

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