SF: Euro Weakens as German Unemployment Rises; Dow Futures Drop
May 2 (Bloomberg) -- The euro weakened for a third day against the dollar and Germany's five-year note yield fell to a record as unemployment in Europe's biggest economy unexpectedly rose. Stocks swung between gains and losses, while U.S. equity- index futures dropped.
The euro depreciated 0.8 percent to $1.3133 at 8:05 a.m. in New York. The Dollar Index advanced 0.5 percent. German five- year note yields sank to 0.565 percent. The Stoxx Europe 600 Index slid less than 0.1 percent. Dow Jones Industrial Average futures fell 0.2 percent after the gauge closed at the highest level since 2007 yesterday. Most markets were closed yesterday in Europe and Asia for Labor Day. Copper dropped 1.4 percent.
German unemployment rose in April as euro-area manufacturing shrank for a ninth month and more than initially estimated, according to reports today. Data yesterday showed recovery in factory output in the U.S. and China. American companies probably added workers in April, economists said before data from ADP Employer Services today.
"These weak numbers reflect the deterioration we've been seeing in the euro zone, and what's worrying is that this is not limited to troubled countries," said Ian Stannard, head of European currency strategy at Morgan Stanley in London. "We expect the euro to come under significant pressure on the back of these reports."
The 17-nation euro fell against 14 of its 16 major peers. The dollar strengthened 0.3 percent versus the yen.
Yields Rise
The 10-year Italian yield rose four basis points from April 30 after the country's unemployment rate climbed more than economists forecast in March to the highest level since 2000, adding to signs an economic slump in the euro region is getting worse.
The German 10-year bund yields fell four basis points to 1.62 percent. The number of people out of work increased a seasonally adjusted 19,000 to 2.87 million, the Nuremberg-based Federal Labor Agency said today.
Three stocks declined for every two that gained in Europe's Stoxx 600. Vestas Wind Systems A/S sank 8 percent to the lowest level since 2003. The biggest wind turbine maker said its loss widened 91 percent in the first quarter and it expects to spend more money on turbine maintenance after uncovering potential faults in 376 machines.
UBS Inflows
UBS AG, Switzerland's biggest bank, climbed 4.2 percent after reporting it attracted more funds from wealthy clients than analysts anticipated and earnings beat estimates.
Futures on the Standard & Poor's 500 Index expiring in June slipped 0.3 percent after the U.S. gauge closed at the highest level in four weeks yesterday.
Reports today may show U.S. factory orders declined in March and companies added 170,000 workers in April, according to economists' forecasts compiled by Bloomberg. The hiring data from ADP Employer Services comes two days before the release of the Labor Department's payrolls report for April, which is forecast to show that employers added 161,000 people.
Time Warner Inc., owner of the cable networks TNT and TBS, reported first-quarter earnings that beat analysts' estimates on gains in television advertising. The shares were little changed in pre-market trading. Visa Inc. is among 32 companies in the S&P 500 due to release earnings today. Of the 316 index members that have posted results since April 10, 230 have topped analysts' per-share profit projections, according to data compiled by Bloomberg.
Emerging Markets
The MSCI Emerging Markets Index advanced 0.5 percent, poised for the highest close since April 6. The Shanghai Composite Index jumped 1.8 percent and Taiwan's Taiex Index gained 2.3 percent. The BUX Index rose 0.7 percent in Budapest as Hungary prepared to start negotiations on a credit line from the International Monetary Fund and the European Union.
The ISE National 100 Index slipped 0.7 percent in Istanbul after S&P cut its outlook for Turkey's long-term foreign and local currency debt ratings to stable from positive yesterday.
Wheat fell 0.6 percent and corn dropped 0.1 percent as wet weather boosted prospects for emerging plants. Gold dropped 0.7 percent to $1,651.82 an ounce.
--With assistance from Mariko Ishikawa in Tokyo, Andrew Rummer, Michael Shanahan, Daniel Tilles, Steve Voss, Anchalee Worrachate and Jason Webb in London. Editors: Stephen Kirkland, Stuart Wallace
To contact the reporters on this story: Stephen Kirkland in London at skirkland@bloomberg.net;
To contact the editor responsible for this story: Justin Carrigan in London at jcarrigan@bloomberg.net
