BLBG:Euro Strengthens On Joint Bond Bets As Stocks Pare Gains
The euro strengthened after Italian Prime Minister Mario Monti said most of the region’s leaders support sales of joint bonds. French 10-year yields fell to an all-time low, while European stocks pared gains.
The euro appreciated 0.4 percent to $1.2580 at 6 a.m. in New York. The Stoxx Europe 600 Index (SXXP) rose 0.1 percent after earlier adding as much as 0.8 percent. Standard & Poor’s 500 Index futures jumped 0.2 percent. The MSCI Asia Pacific Index (MXAP) retreated 0.2 percent, heading for a fourth week of losses, on concern Chinese banks will miss loan targets. The French 10-year bond yield fell to a record 2.422 percent. Oil gained 0.3 percent and copper climbed 0.5 percent.
The majority of EU leaders at a Brussels meeting this week backed joint euro-area government bonds, Monti told Italy’s La7 television station yesterday, even as Germany remains opposed to such sales. The MSCI All-Country World Index has advanced 0.9 percent this week, snapping three weeks of losses that drove equities to their cheapest valuations relative to earnings this year.
“There’s an air of inevitability that we’ll get euro bonds,” Donald Williams, chief investment officer at Platypus Asset Management Ltd. in Sydney, which manages about $1 billion, said in an interview with Susan Li on Bloomberg Television’s “First Up.” “Germany is going to have to compromise more than it was willing to a few months ago. Ultimately there will be some resolution there and the markets will start to head higher again.”
Cheapest This Year
More than $4 trillion was erased from the value of global equities in the first three weeks of the month as concern deepened Greece will abandon the euro, driving valuations of shares in the MSCI World gauge down to 12.9 times reported earnings, the lowest since Dec. 30. European leaders failed to come up with a plan to resolve the debt crisis at a summit this week.
The Stoxx 600 has advanced 1.3 percent this week, the biggest gain since April 20. Logica Plc, an Anglo-Dutch computer services provider, and Nexans SA (NEX), a maker of cable and wire, rallied more than 4.5 percent today as analysts upgraded the shares.
The increase in S&P 500 futures indicated the U.S. equity gauge will extend the largest weekly advance in more than two months. The Thomson Reuters/University of Michigan final index of consumer sentiment for May is due for release today. The gauge climbed to 77.8, the highest since January 2008, from 76.4 the prior month, according to the median forecast of 60 economists surveyed by Bloomberg.
Paring Declines
The euro’s gain versus the dollar pared its fourth straight weekly decline, the longest run since January. The 17-nation currency rose 0.3 percent versus the yen, trimming five weeks of losses, the most since October. The Dollar Index (DXY), which tracks the U.S. currency against those of six trading partners, fell for the first time in four days, dropping 0.2 percent.
The French 30-year yield declined six basis points, extending a weekly slide to 41 basis points. The Spanish 10-year yield dropped 10 basis points, with the similar-maturity Italian yield nine basis points lower. The German bund yield rose two basis points after falling to a record 1.351 percent yesterday.
The yield on the 10-year Treasury note was little changed at 1.78 percent, set to snap nine weeks of declines, the longest run since 1998.
Oil in New York jumped to $90.95 a barrel. Iran and world powers agreed to hold a new round of talks about the Persian Gulf nation’s nuclear program next month after failing to bridge differences during two days of negotiations in Baghdad that ended yesterday. European Union sanctions banning purchases of Iran’s oil takes full effect on July 1.
Emerging Markets
Copper advanced for a second day. The S&P GSCI gauge of commodities rose 0.4 percent, led by gains in corn, wheat and cotton.
The MSCI Emerging Markets Index (MXEF) slipped 0.1 percent. The gauge has fallen 0.6 percent this week, poised for a 10th weekly decline, the longest string of losses since 1994. The Shanghai Composite Index lost 0.7 percent today. China’s largest banks may fall short of loan targets for the first time in at least seven years as an economic slowdown crimps demand for credit, three bank officials with knowledge of the matter said. Indonesia’s Jakarta Composite Index (JCI) sank 2 percent, the sharpest loss since Nov. 1 and the most in Asia.
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 at jcarrigan@bloomberg.net
