European stock futures and the euro gained before Federal Reserve officials consider measures to stimulate the world’s biggest economy and as G-20 leaders focus on fixing Europe’s banks. Asian shares and oil fell. Euro Stoxx 50 Index futures rose 0.3 percent at 7:21 a.m. in London, while those for the Standard & Poor’s 500 Index (SPX) slid 0.1 percent. The euro rose 0.3 percent to $1.2609. Oil in New York fell 0.4 percent to $82.96 a barrel. The MSCI Asia Pacific Index (MXAP) fell 0.2 percent, with Japan’s Nikkei 225 Stock Average down 0.8 percent. Group of 20 leaders meeting in Mexico are focusing their response to Europe’s financial crisis on stabilizing the region’s banks, raising pressure on German Chancellor Angela Merkel to expand rescue measures as contagion engulfed Spain. Fed policy makers will begin a two-day meeting today at which they will discuss their projections for U.S. growth and consider whether to extend operations to lengthen the maturity of its Treasury holdings in a bid to lower borrowing costs. “There are some expectations that the Fed may extend the Twist program,� said Lee Wai Tuck, a currency strategist at Forecast Pte. in Singapore, using the nickname for the central bank’s maturity-lengthening program. “The Fed may also give some indication that they may do something in the later part of the year. The dollar will come under pressure.� Greenback Slide The Fed bought $2.3 trillion of bonds in two rounds of so- called quantitative easing, or QE, from December 2008 to June 2011, seeking to cap borrowing costs and stimulate the economy. The Dollar Index, which Intercontinental Exchange Inc. uses to track the greenback against the currencies of six U.S. trading partners, tumbled 14 percent during that period. The gauge was at 81.781 today, after yesterday touching 81.161, the lowest since May 22. The 17-nation euro touched $1.2748 yesterday, the highest level since May 22. Spain will sell bills today, a day after yields soared to a euro-era record. The yen gained 0.1 percent against the dollar, as Bank of Japan Governor Masaaki Shirakawa said today the central bank is in close contact with its counterparts to provide liquidity. The Chinese yuan traded near its strongest level this month as China’s Commerce Minister Chen Deming said the economy could improve with government stimulus efforts. The world’s biggest user of industrial metals needs to “start our own consumption so that domestic markets can help offset some impacts from global trade,� Chen told reporters in Mexico. Rubber Glut The S&P GSCI Index was little changed, erasing gains earlier in the day. Copper in London and nickel futures were both up 0.3 percent. Rubber futures fell 1.5 percent. Slowing growth in China, the world’s second-biggest economy, may turn rubber shortages into a glut, according to Chris Pardey, a former commodities trader at Cargill Inc. and Noble Group Ltd. The futures, which entered a bear market last month, will drop a further 21 percent to 200 yen a kilogram ($2,532 a ton) in Tokyo by the end of the year, the lowest since October 2009, according to the median of 15 analyst and trader estimates compiled by Bloomberg. Corn climbed 1.2 percent to $5.405 a bushel, for a two-day advance of 6.8 percent, on concern that hot, dry weather will curb yields in U.S. growing areas. Oil traded near the lowest close in three days in New York. U.S. crude supplies probably dropped 1.3 million barrels last week, according to the median estimate of seven analysts in a Bloomberg survey before a report from the Energy Department tomorrow. The American Petroleum Institute will release separate inventory data today. Hong Kong Asian stocks touched a one-month high yesterday. The MSCI Asia-Pacific Index, which lost 10 percent through yesterday from this year’s highest level in February, is trading at 1.2 times book value, compared with 2.1 times for the S&P 500 and 1.3 times for the Stoxx 600, according to data compiled by Bloomberg. A number below one means companies can be bought for less than the value of their assets. Australia’s S&P/ASX 200 Index dropped 0.3 percent. South Korea’s Kospi was little changed in Seoul. Hong Kong’s Hang Seng Index fell 0.4 percent and China’s Shanghai Composite Index slid 0.5 percent. Esprit Holdings Ltd. (330), a clothier that counts Europe as its largest market, slipped 2.3 percent in Hong Kong. Pacific Basin Shipping Ltd. (2343) declined 4.9 percent after Hong Kong’s biggest operator of dry-bulk ships predicted a first-half loss. Hong Kong stocks may be bottoming, as dividend yields on the Hang Seng Index rose above 4 percent this month, a level that was only reached on four other instances since 1993 that coincide with the trough of the benchmark, according to data compiled by Bloomberg. Treasuries Yields Treasury 30-year yields were one basis point from an almost two-week low before Spain sells bills today amid concern Europe’s debt crisis is deepening in the region’s fourth-biggest economy. Rates remained lower following a decline yesterday, after Spain’s 10-year yields climbed to more than 7 percent for the first time in the euro era. The Markit iTraxx Asia index of 40 investment-grade borrowers outside Japan climbed 3 basis points to 180 basis points as of 8:24 a.m. in Hong Kong, according to Royal Bank of Scotland Group Plc. The gauge is set for its first increase since June 8, according to data provider CMA. To contact Bloomberg News staff for this story: Chua Baizhen in Beijing at bchua14@bloomberg.net To contact the editor responsible for this story: Nick Gentle at ngentle2@bloomberg.net

Source