BLBG:Stocks in Europe Rise as Spanish Bonds Climb After Debt Sale; Copper Gains
European stocks and U.S. index futures rose as Spain sold almost double the amount planned and Italy’s borrowing costs declined at debt sales today. Copper climbed after Chinese inflation cooled and the Federal Reserve said the U.S. economy improved.
The Stoxx Europe 600 Index gained 0.7 percent points at 10:10 a.m. in London. Standard & Poor’s 500 Index futures added 0.4 percent. The yield on the Spanish two-year note dropped to less than 3 percent for the first time since April 2011, with the extra yield investors demand to hold Italian 10-year bonds instead of benchmark German bunds slipping 30 basis points. Copper climbed 1.7 percent, and the S&P GSCI gauge of 24 commodities increased 0.9 percent.
Spain sold 9.98 billion euros ($12.7 billion) of notes, compared with a target of as much as 5 billion euros, while the yield on Italy’s one-year bills fell to 2.735 percent. Japan said it may reduce petroleum imports from Iran, which has threatened to shut the Strait of Hormuz. China reported inflation slowed to a 15-month low in December, and the Federal Reserve said yesterday the U.S. economy improved last month across most of the country.
“The carry trade, with banks borrowing from the European Central Bank and then investing in short term government notes, will continue to be supportive for Spanish and Italian yields,” said Alessandro Giansanti, a senior rates strategist at ING Groep NV in Amsterdam.
The yield on Spain’s two-year note dropped for the fourth straight day, sliding 17 basis points to 2.93 percent. The yield on the French 10-year bond dropped 10 basis points, narrowing the difference in yield with bunds by 12 basis points.
Treasury Auction
The yield on the 30-year U.S. Treasury bond rose almost two basis points to 2.98 percent before the government sells $13 billion of the securities, the last of three auctions this week totaling $66 billion.
The euro strengthened 0.3 percent against the yen and appreciated 0.2 percent versus the dollar. The ECB and the Bank of England will probably keep interest rates unchanged today, according to economists surveyed by Bloomberg.
Financial companies led gains in the Stoxx 600. Royal Bank of Scotland Group Plc (RBS) jumped 6.8 percent as Britain’s biggest government-owned lender said it will cut 3,500 jobs at its investment bank. ING Groep NV, the largest Dutch financial- services company, advanced 2.9 percent after saying it will explore other options for the planned disposal of its Asian insurance and investment-management businesses.
A gauge of European retailers had the biggest drop since May 2010. Tesco Plc plummeted 15 percent, the most since at least 1988, after the U.K.’s largest supermarket chain reported Christmas sales that missed analyst estimates and reined back profit expectations. Delhaize Group SA, the owner of the U.S. Food Lion supermarkets, sank 10 percent in Brussels after also reporting sales that trailed projections.
Chevron Profit
The decline in S&P 500 futures indicated the U.S. gauge will snap three days of gains. Chevron Corp. (CVX) slid 2.3 percent in German trading as the second-largest U.S. energy company said fourth-quarter profit was “significantly below” that of the previous period.
A Commerce Department report at 8:30 a.m. in Washington may show sales at U.S. retailers rose in December as Americans bought discounted holiday items. The projected 0.3 percent gain would follow a 0.2 percent advance in November, according to the median forecast of 75 economists surveyed by Bloomberg. First- time jobless-benefit claims were little changed last week, another release may show.
Copper led commodities higher. China is the biggest buyer of the metal. Wheat rose 0.9 percent and corn gained 0.9 percent. Japan bought 139,239 metric tons of milling wheat from the U.S. today, the most in two months, the Ministry of Agriculture, Forestry and Fisheries said.
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
