European bond yields rose on mounting concern the region’s finance ministers will fail to resolve its debt crisis as Asian stocks (MXAP) declined and the won weakened to a two-month low after North Korean leader Kim Jong Il died. U.S. futures rebounded.
The yield on the French 10-year bond climbed seven basis points, with the German bund yield four basis points higher at 11:58 a.m. in London. Standard & Poor’s 500 Index futures advanced 0.7 percent, while the Stoxx Europe 600 Index gained 0.8 percent. The MSCI Asia Pacific Index slid 1.8 percent as South Korea’s Kospi index slumped 3.4 percent. The won fell against all 16 major peers, with the euro 0.2 percent weaker versus the dollar at $1.3017. Copper retreated 0.8 percent.
Euro-area finance ministers are seeking to meet a self- imposed deadline for drawing additional aid to the debt crisis through the International Monetary Fund and put together new budget rules. France is set to sell as much as 7 billion euros ($9.1 billion) of bills after Fitch Ratings last week reduced its outlook for the nation’s credit grade to negative from stable. Kim, 70, died on Dec. 17 of exhaustion brought on by a sudden illness, the official Korean Central News Agency said.
“What investors don’t like most is uncertainty,” said Im Jeong Jae, a Seoul-based fund manager at Shinhan BNP Paribas Asset Management Co., which oversees about $28 billion. “Amid very limited information over his death, it’s very tricky to guess what will happen in the communist nation as well as the impact on regional security.”
European Funding
French 10-year bonds snapped a four-day gain as yields increased to 3.12 percent. The Dutch 10-year yield climbed five basis points, with the yield on the similarly dated Finnish security also five basis points higher.
Belgium’s 10-year yield jumped nine basis points after the nation’s credit ranking was cut two steps at the end of last week by Moody’s Investors Service.
European finance ministers hold a conference call at 3:30 p.m. Brussels time to discuss 200 billion euros of additional funding through the IMF.
“There’s not going to be any upside until this situation is fixed,” Nick Maroutsos, who oversees the equivalent of about $3 billion as co-founder of Sydney-based Kapstream Capital, said in a Bloomberg Television interview. “Given that France might get downgraded, or we could see further sovereign defaults in the coming months, ultimately it’s going to put more pressure on the banks in the European region and also more pressure on the global environment.”
European Stocks Rise
The Stoxx 600 snapped two straight weeks of losses, paring this year’s loss to 15 percent. Barratt Developments Plc slid as much as 4.9 percent as Citigroup Inc. downgraded the U.K. homebuilder. Suedzucker AG, a maker of sugar, starch and bakery additives, climbed 3.5 percent after Goldman Sachs Group Inc. recommended the shares.
The gain in S&P 500 futures expiring in March signaled the U.S. stocks gauge will climb for a third day. The 10-year Treasury yield rose two basis points to 1.87 percent before the U.S. auctions $35 billion of two-year notes, the first of three sales this week totaling $99 billion.
U.S. online spending for the holiday season has jumped 15 percent to $30.9 billion from a year earlier, ComScore Inc. said. Consumer purchases probably rose 0.3 percent in November after increasing 0.1 percent in October, according to the median forecast of 62 economists surveyed by Bloomberg before Commerce Department figures scheduled for Dec. 23.
Asian Stocks Tumble
The MSCI Emerging Markets Index (MXEF) dropped 1.4 percent, set for the lowest closing level in three weeks. The Shanghai Composite Index (SHCOMP) lost 0.3 percent after new home prices in China dropped in 49 of 70 cities monitored by the government in November. The BSE India Sensitive Index (SENSEX) fell 0.7 percent, while Russia’s Micex Index rose 0.1 percent.
South Korea’s won depreciated 1.4 percent to 1,174.80 per dollar, after declining to the weakest since Oct. 7. A government statement called on North Koreans to “loyally follow” his son, Kim Jong Un. The dollar strengthened against most of its 16 most actively traded peers.
Three-month copper dropped to $7,283 a metric ton in London and nickel slipped 0.8 percent to $18,401 a ton.
To contact the reporters on this story: Rob Verdonck in London at rverdonck@bloomberg.net
To contact the editor responsible for this story: Stephen Voss on sev@bloomberg.net
