BLBG:Europe Futures, Metals Gain On Stimulus Signs; Euro Drops
Stocks (MXWO) gained for a second day on speculation European leaders will join China in stepping up efforts to support global growth. Spanish bonds rose after a bill sale, while German bunds fell and the yen weakened.
The MSCI All-Country World Index added 0.3 percent at 6:45 a.m. in New York, after climbing 0.6 percent. Standard & Poor’s 500 Index futures slipped 0.1 percent. The yen depreciated 0.5 percent against the dollar after Fitch Ratings downgraded Japan’s debt. The German 10-year bund yield jumped three basis points to 1.46 percent, while similar-maturity Spanish bond yields slid 14 basis points after the government beat its maximum target at an auction today.
European leaders will do “everything necessary” to keep Greece in the 17-nation euro and focus on steps to aid economic expansion, German Finance Minister Wolfgang Schaeuble said yesterday. China plans to speed up approval of infrastructure projects and allocate construction funding faster to improve growth, the China Securities Journal reported. Fitch cut Japan’s rating to A+ with a negative outlook.
“Markets have room to rebound,” said Mikio Kumada, a global strategist in Singapore at LGT Capital Management, which manages more than $20 billion globally. “Even if Greece exits, Europe will go to great lengths to ensure this is done in the least painful way. A compromise by the euro zone leaders would reinforce such hopes.”
Debt Crisis Risk
Stocks pared gains after Fitch downgraded Japan and the Organization for Economic Cooperation and Development said Europe’s debt crisis risks spiraling and seriously damaging the world economy.
The Stoxx Europe 600 Index increased 0.7 percent, after climbing as much as 1.1 percent. Rio Tinto Group and Renault SA led gains in mining companies and automakers, rising more than 2.8 percent. Homeserve Plc (HSV), the U.K. provider of emergency- repair services that suspended telephone sales and marketing in October after a review showed they didn’t meet its standards, plunged 23 percent after saying the Financial Services Authority will investigate “certain historic issues.”
Futures on the S&P 500 fell after the benchmark gauge jumped 1.6 percent yesterday, the most since March 13. A report at 10 a.m. New York time may show sales of existing U.S. homes rose in April for the first time in three months. Purchases climbed 2.9 percent to a 4.61 million annual rate, according to the median forecast of 73 economists surveyed by Bloomberg.
European Summit
European leaders are scheduled to meet in Brussels tomorrow. German Chancellor Angela Merkel said she won’t shy away from disagreeing with French President Francois Hollande, saying good cooperation “doesn’t exclude differing positions.” France isn’t out to create conflict and will welcome “all the tools, all the proposals” at the meeting, Hollande said.
Spain’s two-year note yield slid 14 basis points, and the cost of insuring the country’s debt against default dropped 17 basis points to 538. Spain sold 2.53 billion euros ($3.2 billion) of bills, more than its maximum target of 2.5 billion euros. The Italian two-year note yield tumbled 18 basis points.
The Markit iTraxx SovX Western Europe Index of credit- default swaps on 15 governments declined four basis points to 312. In addition to Spain, the Netherlands sold 3 billion euros of 2015 notes today, and the European Financial Stability Facility plans to sell as much as 1.5 billion euros of 182-day bills.
The yen weakened against 12 of its 16 most-traded peers, extending declines after Fitch cut Japan’s rating by one step because of the nation’s “leisurely” efforts to tackle the world’s biggest public debt burden.
BOJ Meeting
The yen fell earlier as the Bank of Japan started a two-day meeting. Seven out of 14 economists surveyed by Bloomberg News said they expect the central bank to bolster monetary stimulus by July, while none predict action at the end of the meeting tomorrow. The Bank of Japan increased planned bond purchases a month ago.
The euro weakened 0.6 percent to $1.2747, declining against all but two of its 16 major counterparts. The Dollar Index rose for the first time in three days, adding 0.3 percent. The pound fell 0.4 percent versus the dollar U.K. inflation slowed and the International Monetary Fund said more stimulus such as quantitative easing is needed to boost the economy.
The 10-year U.S. Treasury yield rose four basis points to 1.78 percent, climbing for the third straight day, before the government auctions $35 billion of two-year securities, the first of three note sales this week totaling $99 billion. The 30-year yield jumped as much as seven basis points, the biggest intraday increase since May 10.
Faster Growth
Norway’s krone appreciated 0.5 percent versus the euro after a report showed the nation’s economic growth increased by more than economists forecast in the first quarter as investments in offshore oil and gas fields allowed Europe’s second-largest crude exporter to evade the region’s debt crisis.
The S&P GSCI Index of 24 commodities fell 0.4 percent, reversing earlier gains. Oil slipped 0.6 percent and copper dropped 0.3 percent. Natural gas gained 0.9 percent and arabica coffee climbed 1 percent.
The MSCI Emerging Markets Index (MXEF) added 0.7 percent. The Hang Seng China Enterprises Index of Chinese stocks listed in Hong Kong advanced 1.2 percent and the Shanghai Composite Index increased 1.1 percent. Industrial stocks led the advance with Anhui Conch Cement Co., the biggest Chinese cement producer, jumping 4.4 percent. Benchmark gauges in South Korea, Taiwan and Hungary climbed more than 1 percent. Russia’s Micex Index fell 0.4 percent and India’s Sensex lost 1 percent.
To contact the reporters on this story: Stephen Kirkland in London at skirkland@bloomberg.net; David Yong in Singapore at dyong@bloomberg.net;
To contact the editor responsible for this story: Justin Carrigan at jcarrigan@bloomberg.net
