The euro weakened against the yen and dollar while most Asian stocks fell after a downgrade of Italy’s credit rating added to concern Europe’s debt crisis will worsen. Commodities rose for the first time in four days and European equity-index futures advanced. The 17-nation currency slid 0.4 percent to 102.11 yen and lost 0.3 percent to $1.3313 at 3:02 p.m. in Tokyo. The MSCI Asia Pacific Index retreated 0.2 percent, after earlier gaining as much as 0.6 percent. Standard & Poor’s 500 Index futures declined 0.2 percent after a rally in the U.S. stocks gauge in the final hour of trading yesterday. Euro Stoxx 50 Index contracts climbed 1.4 percent. Oil jumped 3 percent in New York and copper increased 2.8 percent in London. Moody’s Investors Service cut Italy’s grade for the first time in almost two decades and said other European countries rated below the top Aaa level may face reductions in their rankings. European Union finance ministers are discussing ways of coordinating recapitalizations of the region’s banks, the Financial Times reported. Federal Reserve Chairman Ben S. Bernanke said the U.S. central bank can take further steps to sustain a recovery that’s “close to faltering.” “No concrete measures on solving Europe’s crisis have come out,” said Hitoshi Asaoka, a senior strategist in Tokyo at Mizuho Trust & Banking Co., a unit of Japan’s third-largest listed bank. “There won’t be an end to the market’s volatility until we see something that will calm the situation.” The euro weakened after Moody’s cut Italy’s rating three levels to A2 from Aa2, with a negative outlook, after Standard & Poor’s downgraded Italy on Sept. 20 for the first time in five years. ECB Rates Signs that the region’s debt crisis is hampering growth have prompted speculation the European Central Bank will lower borrowing costs at a policy meeting tomorrow. Eleven of 52 economists surveyed by Bloomberg said it will cut its benchmark interest rate by at least a quarter-percentage point from the current rate of 1.5 percent. The others expect no change. The debt crisis has dragged on shares of bank stocks, with Dexia SA plunging 22 percent yesterday, the largest loss on the Bloomberg Europe 500 Banks and Financial Services Index. Belgian Prime Minister Yves Leterme said a “bad bank” will be set up to hold the Belgian-French lender’s troubled assets. “The markets are trading on news of the day, rumors, announcements and innuendo,” Michael Cuggino, who helps manage about $15 billion at Permanent Portfolio Funds in San Francisco, said in a Bloomberg Television interview. “That’s going to continue until we have some visibility into the future with respect to the U.S. economy, what’s happening in Europe as well as what’s going on in Asia.” Stocks Slide About five shares declined for every three that gained on MSCI’s Asia Pacific Index, following a three-day, 5.7 percent slump. Japan’s Nikkei 225 Stock Average retreated 0.9 percent, paced by a 4 percent drop in Fast Retailing Co., after Asia’s biggest apparel chain said same-store sales at its Uniqlo casual clothing stores in Japan fell 10.7 percent in September from a year earlier. Raw material producers tracked gains in commodity prices. BHP Billiton Ltd. (BHP), the world’s biggest mining company, rallied 3.8 percent and Rio Tinto Group climbed 2.2 percent in Sydney. The S&P 500 ended the day with a 2.3 percent advance. It was the 10th time since 1985 that the index posted a loss of 1 percent or more at 3 p.m. and was up when the market closed, according to data compiled by Harrison, New York-based Bespoke Investment Group LLC. The measure declined the next day eight times, with losses averaging 1.3 percent, the data show. Bernanke’s Testimony In testimony to Congress’s Joint Economic Committee in Washington, Bernanke cautioned lawmakers against making changes in fiscal policy that harm growth. The Fed can give more information about its pledge to keep interest rates low at least through mid-2013, reduce the rate paid on banks’ reserve deposits or buy more securities, he said, reiterating options he mentioned in July. Treasury 10-year yields rose one basis point to 1.83 percent. S&P’S GSCI Index of raw materials advanced 1.8 percent, rebounding from a three-day, 5.1 percent slump. Oil for November delivery rose 3 percent to $77.95 a barrel on the New York Mercantile Exchange, halting a three-day 7.9 percent drop. Crude inventories decreased 3.07 million barrels last week, according to the American Petroleum Institute. An Energy Department report today may show an increase of 1.5 million barrels, according to the median estimate in a Bloomberg survey of analysts. Three-month copper climbed 2.8 percent to $6,990 a metric ton on the London Metal Exchange, rebounding from five days of losses. Zinc futures gained 1.5 percent, nickel added 0.8 percent and aluminum rose 1.6 percent. Spot platinum dropped 2.3 percent to $1,444.75 an ounce, a third day of losses. To contact the reporter on this story: Shiyin Chen in Singapore at schen37@bloomberg.net; Yoshiaki Nohara in Tokyo at ynohara1@bloomberg.net. To contact the editor responsible for this story: Rocky Swift at rswift5@bloomberg.net

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