BS: U.S. Stocks, Dollar Decline as Italian Bonds, Copper Retreat
Dec. 27 (Bloomberg) -- U.S. stocks fell, the dollar weakened and European equities swung between gains and losses after a report showed American home prices were worse than estimated. Italian government bonds declined as the nation prepares to sell debt this week.
The Standard & Poor’s 500 Index fell 0.2 percent to 1,262.96 at 9:31 a.m. New York time. The Dollar Index declined 0.1 percent, slumping a fourth straight day. The Stoxx Europe 600 Index dropped 0.1 percent after adding 0.3 percent. Italian 10-year bond yields climbed four basis points to 7.02 percent. Copper futures lost 1.5 percent, and gold dropped 0.6 percent.
House prices in 20 U.S. cities dropped 3.4 percent from a year earlier in October, compared with the median economist forecast for a 3.2 percent decline. A report later may show consumer confidence improved, according to the economist estimate. The world economy is in danger because of Europe’s debt crisis, said International Monetary Fund Managing Director Christine Lagarde. Italy will sell 9 billion euros ($12 billion) of 179-day bills and as much as 2.5 billion euros of zero-coupon 2013 bonds tomorrow.
“There’s still plenty to worry about,” James Paulsen, who helps oversee about $333 billion as chief investment strategist at Minneapolis-based Wells Capital Management, said in a phone interview. “The 10-year Italian sovereign is back above 7 percent. That’s concerning. As the European economic situation gets worse, the concern is how much fallout will that have into many global economies, in particular the United States.”
In Europe, Banco Comercial Portugues SA and Banco Espirito Santo SA, Portugal’s biggest lenders, rallied more than 5.8 percent as Jornal de Negocios said the government may recapitalize the country’s banks without becoming a shareholder.
Germany’s DAX Index climbed 0.2 percent and France’s CAC 40 slumped 0.1 percent. U.K. markets remain shut today for the holidays.
The Stoxx Europe 600 has retreated 12 percent this year, compared with a 17 percent drop in the MSCI Asia Pacific and a 0.4 percent gain on the S&P 500. The U.S. equity gauge added 0.9 percent on Dec. 23 after data last week on durable goods, jobless claims and the housing market added to signs the world’s largest economy is recovering.
Treasuries
Treasury 10-year yields fell one basis point to 2.02 percent. German 10-year yields fell three basis point to 1.93 percent. A basis point is 0.01 percentage point.
Europe has made progress in tackling the crisis but needs to speed up the implementation of measures to fight it, Lagarde said in the Journal de Dimanche on Dec. 25. The U.S. is already being affected and growth forecasts for China, Brazil and Russia are being lowered, she said, according to the report.
Copper for March delivery fell as much as 3 percent to $3.365 a pound before trading at $3.434 on the Comex in New York. Futures gained 4.2 percent last week. Gold futures dropped 0.6 percent to $1,596.30 an ounce, and oil advanced 0.2 percent to $99.99 a barrel on the New York Mercantile Exchange.
--With assistance from Paul Dobson and Andrew Rummer in London, Yoshiaki Nohara, Monami Yui, Norie Kuboyama, Toshiro Hasegawa and Pavel Alpeyev in Tokyo, Shiyin Chen and Kristine Aquino in Singapore and Richard Dobson in Shanghai. Editor: Nick Baker
To contact the reporters on this story: Rob Verdonck in London at rverdonck@bloomberg.net; Rita Nazareth in Sao Paulo at rnazareth@bloomberg.net
To contact the editor responsible for this story: Nick Baker at nbaker7@bloomberg.net
