European stocks fell for a third day, the euro weakened while Spanish and Italian bonds dropped on concern the region’s debt crisis will limit economic growth and earnings. The dollar declined to a record against the Swiss franc, while U.S. default risk increased. The Stoxx Europe 600 Index lost 0.2 percent at 10:20 a.m. in London and futures on the Standard & Poor’s 500 Index were little changed. The euro depreciated 0.3 percent to $1.4483, while the Australian and New Zealand dollars strengthened to all-time highs against the U.S. currency. The yield on the Spanish 10-year bond rose above 6 percent for the third day. The cost of insuring against default on U.S. Treasuries for five years climbed to the highest since February 2010, and gold traded at an unprecedented $1,625.70 an ounce. Europe must prevent a breakup of the euro region and an “uncontrolled” exit of one of its members, German Finance Minister Wolfgang Schaeuble said in a letter to lawmakers. Banco Santander SA, Spain’s biggest bank, said second-quarter profit dropped 38 percent as domestic loan provisions rose. U.S. durable goods probably increased for a second month in June, economists said before a Commerce Department report today. “The macro-economic situation shows signs of weakening and the earnings season is more cloudy than previous ones,” said Markus Steinbeis, head of equity portfolio management at the Unterfoehring, Germany-based unit of Pioneer Investments KGmbH, which oversees about $221 billion. “I wouldn’t be surprised if markets were testing policy makers in the coming weeks on Italy’s and Spain’s issues.” Peugeot, Clariant Three stocks fell for every one that gained in the Stoxx 600 index. Santander slipped 2.4 percent, and UniCredit SpA, Italy’s largest lender, slid 4.5 percent. PSA Peugeot Citroen tumbled 8.7 percent as Europe’s second-biggest carmaker said its automotive unit may post a loss in the second half. Clariant AG sank 12 percent after the Swiss chemical maker reported profit that missed analysts’ estimates. The yield on the 10-year Spanish bond increased 10 basis points to 6.06 percent, with the yield on similar-maturity Italian bonds jumping as much as 18 basis points to 5.81 percent. Portuguese yields advanced 20 basis points, and Greek yields climbed seven basis points. The yield on the benchmark German bund fell three basis points. Schaeuble said Germany’s government is against a “blank check” for the euro-area rescue fund to purchase bonds on the secondary market. The Markit iTraxx SovX Western Europe Index of credit-default swaps insuring the debt of 15 governments rose 5.5 basis points to 265.5, according to CMA. Euro, Dollar The 17-nation euro depreciated 0.4 percent against the yen and slid 0.3 percent versus the Swiss franc. The Australian dollar strengthened as much as 1.1 percent against the greenback to the most since it was floated in 1983 after a report showed consumer prices rose more in the second quarter than economists predicted. New Zealand’s dollar also climbed versus the U.S. currency to the highest level since it was freely floated in 1985 after a survey showed business confidence improved in July. The dollar declined 0.3 percent versus the yen to the weakest level since March 17. Credit-default swaps on the U.S. rose for a third day, climbing three basis points to 61. S&P 500 futures rose 0.1 percent after the gauge posted the first back-to-back losses in two weeks. Amazon.com Inc. (AMZN), the world’s largest online retailer, jumped 5.3 percent in Germany after sales and profit beat analysts’ estimates. Dow Chemical Co., Boeing Co. and ConocoPhillips are among 53 S&P 500 companies scheduled to report earnings today. Durable Goods U.S. durable-goods orders rose 0.3 percent in June after a 2.1 percent gain in May, according to the median of 75 economists’ forecasts in a Bloomberg survey before a Commerce Department report due at 8:30 a.m. in Washington. Bookings excluding transportation equipment increased 0.5 percent, the survey showed. Gold for immediate delivery climbed as much as $6.40, or 0.4 percent in London. Silver for immediate delivery rose as much as 0.8 percent to $41.22 an ounce, the highest price since May 4. Oil futures slipped as much as 0.7 percent to $98.91 a barrel in New York. The MSCI Emerging Markets Index rose 0.2 percent, set for the highest close since July 8. China’s Shanghai Composite Index climbed for a second day, rising 0.8 percent after the profit growth accelerated at industrial companies. 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

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