The euro climbed to a one-week high against the dollar and Treasuries slid after German Chancellor Angela Merkel and French President Nicolas Sarkozy said they reached a joint position on Greece’s debt crisis. Most Asian stocks fell on concern China’s economic slowdown is worsening.
The single currency strengthened 0.4 percent to $1.4273 at 3:12 p.m. in Tokyo. Ten-year Treasury yields increased two basis points. Futures on the Standard & Poor’s 500 Index added 0.3 percent and those on the Euro Stoxx 50 Index rallied 0.7 percent. The MSCI Asia Pacific Index was little changed after a two-day rally, and China’s Shanghai Composite Index sank 0.6 percent. Tin led a slide in metals.
The joint Franco-German position will be presented at a summit in Brussels today as regional leaders seek to stem contagion in bond markets. In the U.S., policy makers are intensifying talks on a broad budget agreement to cut the nation’s deficit. China’s manufacturing may have shrank for the first time in a year in July, preliminary data for a purchasing managers’ index showed.
The agreement “is providing some foundation to the belief that there could be something resolved out of today, which is in complete contrast from what we saw in the beginning of the week,” said Andre De Silva, head of Asia-Pacific rates research at HSBC Holdings Plc in Hong Kong. “There are prospects that we will get tentative stability in the next few weeks, though I wouldn’t view this as a sustained trend.”
The euro strengthened against 13 of its 16 most-actively traded counterparts and rallied 0.4 percent to 112.45 yen. It jumped 0.6 percent to 1.17210 Swiss francs, after earlier reaching 1.17497, the highest since July 12.
Europe’s Summit
Euro-area government chiefs will convene today for the second time in a month as they aim to break a deadlock over a new Greek rescue that has spooked investors, sending the euro to $1.3837 last week, the lowest since March. While Merkel said this week the crisis can’t be resolved in “one spectacular step,” Greek Prime Minister George Papandreou said in an interview that the summit could be a “make-or-break moment” for the euro region.
The New Zealand dollar earlier climbed to a record 85.88 U.S. cents before trading at 85.69. The Philippine peso strengthened 0.3 percent to 42.607 per dollar.
Yields on 10-year Treasuries rose to 2.95 percent. They increased five basis points yesterday amid concern that a Senate plan to help the government avoid default faced resistance from House Republicans. President Barack Obama called congressional leaders to the White House yesterday as the Aug. 2 deadline for raising the $14.3 trillion debt limit nears.
‘Politically Induced Problems’
“Everywhere in the world you look you find, in effect, politically induced problems,” George Feiger, chief executive officer of Contango Capital Advisors Inc., a San Francisco-based wealth management firm with about $3.5 billion in assets, said in a Blooomberg Television interview.
S&P 500 futures swung between gains and losses before scheduled earnings reports from Morgan Stanley, PepisCo Inc. and Microsoft Corp. Intel Corp. (INTC), the world’s biggest chipmaker, forecast third-quarter sales that exceed some analyst estimates, buoyed by computer upgrades and first-time purchases by consumers in emerging markets.
About five shares declined for every four that gained on MSCI’s Asia Pacific gauge. Jiangxi Copper Co. sank 1.5 percent in Shanghai after data today showed China’s purchasing managers’ index fell to 48.9 in July. The final reading for the month is due on Aug. 1.
Hana Financial Group Inc. (086790) advanced 2 percent after the South Korean lender said second-quarter profit more than doubled. Hyundai Heavy Industries Co. and LG Chem Ltd. (051910) sank more than 5 percent each in Seoul after reporting lower earnings.
Bond Risk, Commodities
The Markit iTraxx Australia index dropped four basis points to 119 basis points, Westpac Banking Corp. prices show. That would be the lowest close since July 8, according to data provider CMA. The Markit iTraxx Asia index of 50 investment- grade borrowers outside Japan retreated 2.5 basis point to 119, , according to Royal Bank of Scotland Group Plc.
Crude for September delivery was little changed at $98.45 a barrel on the New York Mercantile Exchange, trimming an earlier gain of 0.4 percent. The contract rose yesterday after the Energy Department said inventories fell 3.73 million barrels to 351.7 million for a seventh week of declines. Analysts surveyed by Bloomberg News forecast a decrease of 2 million.
Copper for three-month delivery slid 0.2 percent to $9,735.75 a metric ton on the London Metal Exchange amid speculation Chinese demand for the metal will slow. Nickel retreated 0.6 percent and tin dropped 1.1 percent. Immediate- delivery gold rose less than 0.1 percent to $1,601.80 an ounce. Bullion reached an all-time high of $1,610.10 on July 19.
To contact the reporter on this story: Shiyin Chen in Singapore at schen37@bloomberg.net; Yudith Ho in Singapore at yho29@bloomberg.net.
To contact the editor responsible for this story: Sandy Hendry at shendry@bloomberg.net
