SF: Commodities Drop as Stocks Are Little Changed; Treasuries Gain
April 2 (Bloomberg) -- Commodities declined after European manufacturing contracted and unemployment in the region rose to the highest level since 1997. Stocks were little changed, while Treasuries rose and the yen strengthened.
The S&P GSCI gauge of raw materials retreated 0.4 percent at 9:30 a.m. in New York as natural gas, lead and zinc led declines. The Standard & Poor's 500 Index and Stoxx Europe 600 Index were little changed. The yen strengthened 0.7 percent against the dollar as it appreciated against all 16 major peers. The 10-year U.S. Treasury yield lost three basis points to 2.18 percent.
European unemployment rose to a 14-year high in February and manufacturing contracted for an eighth month in March, reports showed today. China's Purchasing Managers' Index rose to 53.1 in March from 51 in February, according to a government report yesterday. European finance ministers announced a package over the weekend that provides 500 billion euros ($667 billion) in fresh bailout funds on top of 300 billion euros already committed to rescue programs.
"The euro-zone crisis is by no means over," Stephanie Kretz, a strategist at Lombard Odier Darier Hentsche & Cie. in London, said in an e-mailed note.
The S&P 500 had its biggest quarterly gain in two years in the first three months of the year. A report at 10 a.m. New York time may show U.S. manufacturing accelerated in March. The Institute for Supply Management's factory index climbed to 53 from 52.4 in February, according to the median of 55 economist estimates compiled by Bloomberg. Readings greater than 50 signal growth. Construction spending is forecast to have risen 0.6 percent in February, a separate report may show.
Groupon Accounting
Groupon Inc. slid after the largest provider of daily online deals reported a "material weakness" in its financial controls and said fourth-quarter results were worse than previously stated because of higher refunds to merchants.
Credit Agricole SA and Societe Generale paced a decline in European banks, falling more than 3 percent. ING Groep NV helped lead insurers lower, retreating 1.7 percent. Diageo Plc rose 1.5 percent as people familiar with the plans said the world's largest liquor maker appointed Goldman Sachs Group Inc. and HSBC Holdings Plc for advice on gaining control of Jose Cuervo from family owners.
Quarterly Gain
The yield on Italian 10-year bonds dropped one basis points, leaving the difference in yield with bunds two basis points lower. The Spanish 10-year yield fell one basis point.
The Markit iTraxx SovX Western Europe Index of credit- default swaps tied to the debt of 15 governments dropped 3.8 basis points to 266.25.
The yen appreciated 1.2 percent versus the euro, while the Dollar Index, which tracks the U.S. currency against those of six trading partners, was little changed.
Oil traded in New York fell 0.7 percent to $102.31 a barrel. Lead and zinc dropped 1 percent. .
The MSCI Emerging Markets Index added 0.1 percent. In South Korea, the Kospi Index advanced 0.8 percent after the country's credit rating outlook was raised by Moody's Investors Service to positive from stable, boosting demand for the nation's assets.
The FTSE/JSE Africa All Shares Index advanced 0.5 percent in Johannesburg. The ISE National 100 Index added 0.2 percent in Istanbul after Turkish economic growth in the fourth quarter was 5.2 percent, exceeding economists' estimates.
