BLBG:European Stocks, Copper Drop on Greece Aid Concern; Euro Falls
European stocks and copper fell, while Treasuries rose and the euro weakened after regional finance ministers held back a rescue package for Greece. Asian shares slid the most in eight weeks as China’s exports dropped.
The Stoxx Europe 600 Index lost 0.5 percent as of 8:01 a.m. in London. Standard & Poor’s 500 Index futures declined 0.6 percent and 10-year Treasuries climbed for the first time in four days. The MSCI Asia Pacific Index slid 1.5 percent. The euro slipped 0.2 percent to $1.3257. The yield on German 10-year bonds declined two basis points to 2 percent. Copper and zinc fell at least 1 percent and wheat slumped 0.9 percent.
Greece must pass its latest austerity package into law and identify 325 million euros ($431 million) in spending cuts before euro-area governments endorse a second bailout for the country, Luxembourg Prime Minister Jean-Claude Juncker said. While Europe’s economy appears to be in recession, there has been a “general improvement in sentiment” in the past month, according to a statement from the Reserve Bank of Australia. China’s exports fell for the first time in more than two years in January, the customs bureau reported.
“The lack of progress in Greece disappoints investors and is bad for market sentiment,” said Banny Lam, a Hong Kong-based economist at CCB International Securities Ltd., a unit of China’s second-largest bank.
Greek Rescue
Greek Prime Minister Lucas Papademos said yesterday that his government reached an agreement on an austerity package required to receive the 130 billion-euro rescue from the so- called troika of lenders, according to a statement from his press office. The country’s lawmakers are set to convene this weekend to begin voting on the austerity measures, Christos Protopapas, a spokesman for the Pasok socialist party, said yesterday.
The euro has strengthened against 15 of its 16 most-traded counterparts this week. The 17-nation shared currency has risen 0.7 percent against the dollar this week.
U.S. 10-year bond yields declined three basis points to 2 percent. The Thomson Reuters/University of Michigan preliminary consumer sentiment index for February probably eased to 74.8 from January’s one-year high of 75, economists in the Bloomberg survey forecast ahead of data today.
‘Most Dangerous’
Pacific Investment Management Co.’s Bill Gross has increased his holdings of Treasuries to the highest level since July 2010, while billionaire investor Warren Buffett called them “dangerous.” Gross boosted U.S. government and Treasury debt to 38 percent of assets in Pimco’s $250.5 billion Total Return Fund, the world’s biggest bond fund, according to a report on the company’s website yesterday.
“They are among the most dangerous of assets,” Buffett said yesterday in an adaptation of his annual letter to shareholders on Fortune magazine’s website. “Over the past century these instruments have destroyed the purchasing power of investors in many countries, even as these holders continued to receive timely payments of interest and principal.”
Asian stocks have climbed for the past eight weeks, heading for the longest run of gains since 2005. The MSCI Asia Pacific Index (MXAP) has rallied 16 percent from a two-year low in October even as the majority of companies miss analysts’ earnings projections. Profits have trailed estimates at 52 percent of the 347 companies in the MSCI gauge that have released results since Jan. 9, data compiled by Bloomberg show.
Earnings Season
Rio Tinto Group (RIO) sank 2.3 percent in Australian trading. The world’s third-largest mining company swung to a second-half loss, its first in four years, after taking an $8.9 billion one- time charge on the value of its aluminum business. BHP Billiton Ltd. (BHP), the world’s biggest miner, slid 2.3 percent.
Copper for delivery in three months dropped as much as 1.2 percent to $8,655 a metric ton on the London Metal Exchange. Oil for March delivery retreated 0.6 percent to $99.24 a barrel in electronic trading on the New York Mercantile Exchange.
The Hang Seng China Enterprises Index, which tracks mainland companies listed in Hong Kong, retreated 2.3 percent for the biggest drop in two weeks. China’s overseas shipments declined 0.5 percent from a year earlier the customs bureau said today. Imports dropped a more-than-forecast 15.3 percent, leaving a trade surplus of $27.3 billion. Trade in the first two months of the year was distorted by the timing of holidays for the Lunar New Year.
Australia’s dollar retreated 0.9 percent to $1.0691. The central bank lowered its forecasts for growth and inflation this year, enabling policy makers to reduce the benchmark interest rate should the economy weaken significantly.
“Concern is growing the Greece problem won’t be resolved easily, including whether the politicians can agree on the austerity measures,” said Hideki Hayashi, a researcher at the Japan Center for Economic Research in Tokyo.
Wheat fell as low as $6.3825 a bushel, the cheapest level since Jan. 30. The U.S. Department of Agriculture predicted that world stockpiles would climb to a record. Inventories on May 31, before the next harvest, will climb to 213.1 million metric tons, 1.5 percent more than estimated last month, the USDA said yesterday.
To contact the reporters on this story: Lynn Thomasson in Hong Kong at lthomasson@bloomberg.net; Saeromi Shin in Seoul at sshin15@bloomberg.net
To contact the editor responsible for this story: Darren Boey at dboey@bloomberg.net
