SF: Stocks Drop as Treasuries, Yen, Gold Advance on Economy Concern
April 10 (Bloomberg) -- Stocks fell, extending the longest slump for the Standard & Poor's 500 Index since November, after China's imports missed economists' forecasts and Spain's plan for additional budget cuts failed to halt a surge in bond yields. Treasuries, gold and the yen advanced.
The S&P 500 slipped for a fifth straight day, losing 0.4 percent to 1,377.07 at 10:13 a.m. in New York. The Stoxx Europe 600 Index decreased 1.6 percent as trading resumed after most European markets were closed yesterday. The MSCI Asia Pacific Index lost 0.2 percent. Ten-year Treasury yields decreased four basis points to 2.01 percent. The yen strengthened against all 16 of its most-traded peers, while the dollar rose against 14. German two- and five-year note yields fell to records. Gold climbed for a fourth day.
Federal Reserve Chairman Ben S. Bernanke said in a speech yesterday that the U.S. was still "far from having fully recovered." China reported a trade surplus for March as import growth trailed forecasts. U.S. employers added 85,000 fewer jobs in March than economists projected, the Labor Department said April 6, when most European markets were closed. Spanish bond yields surged as Economy Minister Luis de Guindos declined to rule out a rescue for the nation.
"Stocks are out of the sweet spot that yielded such strong gains in the start of the year, as macro indicators are weakening while the economy is proving too strong to warrant more stimulus," said Witold Bahrke, a senior strategist at PFA Pension A/S in Copenhagen, where he helps oversee $55 billion. "Spain is reminding investors the risk of contagion from the European debt crisis isn't over just because the European Central Bank injected liquidity."
European Stocks Fall
The Stoxx 600 dropped to the lowest level since Feb. 1 as all 19 industry groups retreated. SBM Offshore NV lost 11 percent as the world's biggest supplier of floating oil and gas output platforms said some sales practices "may have been improper." Randgold Resources Ltd., which gets two-thirds of its gold from Mali, rallied 8.2 percent as Amadou Sanogo, the leader of the African nation's military junta, agreed to hand over power to a temporary government.
The MSCI Emerging Markets Index retreated 0.5 percent, poised for its lowest closing level since Jan. 31. The Hang Seng China Enterprises Index of Chinese stocks listed in Hong Kong lost 1.4 percent. China reported an unexpected trade surplus last month as inbound shipments increased 5.3 percent, below the 9 percent median estimate in a Bloomberg survey.
Boost the Economy
Thailand's SET Index slid 1.4 percent and the ISE National 100 Index fell 0.6 percent in Istanbul. The Shanghai Composite Index gained 0.9 percent on speculation the government will take measures to boost the economy.
The yen appreciated 0.6 percent against the dollar, and climbed 0.6 percent versus the euro, rising against both for the fifth consecutive day. The Swiss franc was little changed at 1.20240 against the euro after it strengthened through the 1.20 per euro ceiling during yesterday's trading day, the second time the cap was breached since being established by the nation's central bank on Sept. 6.
German, Spanish Bonds
The yield on the German two-year note fell to 0.112 percent, while the five-year note yield dropped to 0.657 percent, both the lowest on record, according to data compiled by Bloomberg. The Spanish 10-year yield jumped 19 basis points from last week's close to 5.95 percent, driving the difference in yield, or spread, with German 10-year bunds, the region's benchmark government securities, to 4.28 percentage points, the most since Nov. 29. The Italian 10-year yield rose 16 basis points to 5.61 percent, sending the spread over bunds to 3.94 percentage points, the most since Feb. 16.
Switzerland sold 182-day bills at an average yield of - 0.251 percent, according to the nation's central bank. About 710 million francs were allotted, it said.
"We have a renewed concern in the euro region as the debt problem hasn't gone away despite the liquidity support from the European Central Bank," said Vincent Chaigneau, the global head of interest-rate strategy at Societe Generale SA in Paris. "The poor nonfarm payroll data out of the U.S. only exacerbated the risk-off sentiment. Peripheral bond yields are likely to continue to rise in the near term."
Yields on two-year and 30-year U.S. Treasuries also fell before the government sells $32 billion of three-year notes, the first of three auctions this week totaling $66 billion.
Gold Gains
The Markit iTraxx Crossover Index of credit-default swaps on 50 companies with mostly high-yield credit ratings climbed 34 basis points to 674, the highest since Jan. 19.
Gold gained for a fourth day, the longest stretch since Feb. 23, rising 0.3 percent to $1,645.07 an ounce. Soybeans and corn climbed before the U.S. Department of Agriculture's monthly crop report. World inventories of soybeans and corn before the 2012 harvests in the Northern Hemisphere probably will be smaller than the USDA's estimate last month, according to a Bloomberg survey of as many as 19 analysts. The USDA report is set for release at 8:30 a.m. in Washington.
Oil slipped 0.3 percent to $102.13 a barrel in New York before a government report tomorrow that analysts surveyed by Bloomberg expect will show U.S. crude stockpiles rose to the highest in 22 years.
--With assistance from Jonathan Burgos in Singapore, Jason Clenfield in Tokyo, Paul Armstrong, Daniel Tilles, Claudia Carpenter, Andrew Rummer, Sarah Jones, Lucy Meakin, Anchalee Worrachate and Jason Webb in London and Peter Levring in Copenhagen. Editor: Michael P. Regan
To contact the reporter on this story: Stephen Voss in London at sev@bloomberg.net
To contact the editor responsible for this story: Justin Carrigan at jcarrigan@bloomberg.net
