BS: Pound Strengthens Versus Dollar, Yen as European Stocks Advance
Dec. 5 (Bloomberg) -- The pound advanced versus the dollar and yen amid optimism moves by European leaders may soothe the euro region’s debt crisis and ease pressure on U.K. growth.
Stocks gained after Italian Prime Minister Mario Monti yesterday proposed to cut the nation’s debt and reduce the risk of Italy sparking the euro’s breakup. German and French leaders meet today, kicking off meetings aimed at fixing the crisis. An index published later today is forecast by economists to show U.K. services activity dropped for a second month in November. Gilts were little changed.
The pound was 0.3 percent stronger at $1.5647 at 8:57 a.m. London time. It appreciated 0.3 percent to 121.93 yen and was little changed at 85.94 pence per euro.
The U.K.’s FTSE 100 Index of stocks rose for the sixth day in seven, gaining 0.2 percent and the Stoxx Europe 600 Index climbed 0.4 percent.
Sterling has appreciated 1.6 percent in the past three months, according to Bloomberg Correlation-Weighted Indexes, which track a basket of 10 developed-nation currencies.
A gauge of services based on a survey of purchasing managers declined to 50.5 from 51.3 in October, according to the median of 24 estimates in a Bloomberg News survey. A reading above 50 indicates expansion.
The Engineering Employers Federation cut its U.K. growth forecasts and said manufacturers expect the industry to stagnate in the first quarter.
Manufacturing Forecast
The EEF sees gross domestic product rising 1 percent in 2012 instead of the 2 percent forecast in September, with factory output growing 0.9 percent rather than 2.2 percent, Chief Economist Lee Hopley told reporters at a briefing in London on Dec. 2. A manufacturing survey published today showed companies predict flat output and a “modest contraction” in orders in the first quarter, Hopley said.
The 10-year gilt yield was little changed at 2.29 percent, while two-year yields were at 0.39 percent.
Gilts have returned 14 percent this year, according to indexes compiled by Bloomberg and the European Federation of Financial Analysts Societies, while European benchmark German bunds rose 7.4 percent. U.S. Treasuries have gained 9.2 percent.
--Editors: Mark McCord, Nicholas Reynolds
To contact the reporter on this story: Lucy Meakin in London at lmeakin1@bloomberg.net.
To contact the editor responsible for this story: Daniel Tilles at dtilles@bloomberg.net.
