Stocks (MXWD) and the euro declined on concern Europe will struggle to contain the debt crisis. Hungarian shares tumbled and the forint slumped to a record.
The Stoxx Europe 600 Index (SXXP) lost 0.7 percent at 10:05 a.m. in London as UniCredit SpA, Italy’s biggest bank, tumbled for a second day. Standard & Poor’s 500 Index futures slid 0.7 percent. French 10-year bond yields were little changed after a government debt sale. The euro slid 0.8 percent to $1.2835. Hungary’s forint sank 0.6 percent to 322.50 versus the euro.
Greece Prime Minister Lucas Papademos said yesterday deeper cuts in incomes and an agreement on international aid are the only way for the country to avert economic collapse and a “disorderly default.” France sold 10-year bonds at an average yield of 3.29 percent, up from 3.18 percent in December. The U.S. service industry probably grew last month and jobless claims fell last week, economists said before reports today.
“Problems sparked by the European debt crisis are reigniting and people in the market have reaffirmed that the situation has not changed,” said Mitsushige Akino, who oversees about $600 million at Ichiyoshi Investment Management Co. in Tokyo. “That’s weakening the euro and hurting exporters with a heavy reliance on Europe.”
The decline in the Stoxx 600 extended yesterday’s 0.6 percent drop. UniCredit slid 8.9 percent to the lowest level since 1992 after yesterday plunging 15 percent on plans to sell shares in a rights offer at a 43 percent discount.
Banks Decline
Societe Generale SA retreated 4.8 percent as the French bank said it plans to cut about 1,580 jobs at its corporate and investment banking unit. Banco Comercial Portugues SA and Banco Espirito Santo SA lost more than 5 percent in Lisbon.
The decline in S&P 500 futures indicated the U.S. equities gauge will drop for the first time this year. The Institute for Supply Management’s non-manufacturing index, due for release at 10 a.m. New York time, rose to 53 in December from 52 the previous month, according to a Bloomberg survey of economists. Fifty is the dividing line between expansion and contraction in the services gauge.
A separate release may show the number of applications for jobless benefits fell last week. The data comes before tomorrow’s payrolls report from the Labor Department, which is forecast to show the U.S. economy generated 150,000 jobs last month, according to an economist survey.
Aid Talks
Hungary’s BUX Index (BUX) fell 3.2 percent, taking its three-day decline to 6.6 percent, on concern the International Monetary Fund and the European Union won’t resume aid talks. Hungary is ready to accept “certain” conditions in its talks with the IMF, state-run news service MTI reported today, citing an interview with Janos Lazar, head of the ruling party’s parliamentary group.
The extra yield (.FRANGER) investors demand to hold French 10-year debt instead of benchmark German bunds rose five basis points to 144 basis points, or 1.44 percentage points. France auctions securities maturing in October 2021, October 2023, April 2035 and April 2041. The 10-year bonds of Belgium, Austria, Spain and Italy also underperformed relative to German debt.
The Dollar Index (DXY), which tracks the U.S. currency against those of six trading partners, climbed 0.4 percent. The euro slid 0.5 percent against the yen, approaching an 11-year low, and depreciated 0.3 percent versus the pound.
Gold climbed 0.4 percent to $1,617.77 an ounce, extending the longest advance since Oct. 27. Oil in New York fell 0.3 percent to $102.87 a barrel, the first decline in three days.
To contact the reporters on this story: Stephen Kirkland in London at skirkland@bloomberg.net; Lynn Thomasson in Hong Kong at lthomasson@bloomberg.net
To contact the editor responsible for this story: Stuart Wallace at swallace6@bloomberg.net
