European stocks fell from a two-month high and metals declined after Germany’s services industries unexpectedly shrank last month. The euro weakened amid speculation the European Central Bank will cut interest rates to a record low tomorrow. The Stoxx Europe 600 (SXXP) Index slipped 0.4 percent at 9:45 a.m. in London, and Standard & Poor’s 500 Index futures dropped 0.2 percent. The euro depreciated 0.2 percent to $1.2586. The cost of insuring Spanish debt against default increased for the first time in four days. Copper slipped 1.2 percent and Brent oil dropped 1 percent. A gauge of services purchasing managers fell to 49.9 in June, less than the earlier reading of 50.3, according to London-based Markit Economics. Other reports showed euro-area services and manufacturing output contracted for a fifth month, and China’s services expanded at the slowest pace in 10 months. The International Monetary Fund cut its U.S. growth estimate yesterday and said the Federal Reserve may need to further ease monetary policy. ECB President Mario Draghi will probably cut the benchmark rate by a quarter point to 0.75 percent, according to the median forecast of 21 economists in a Bloomberg survey. “Slow growth dynamics and uncertainty are pressuring the euro,� said Gavin Friend, a London-based markets strategist at National Australia Bank Ltd. “The ECB will probably cut tomorrow, Draghi has hinted that an easing of policy is on the way. The euro will probably lag behind, with other currencies rallying more.� Earnings Beat The Stoxx 600 retreated from the highest level since May 3 as two shares dropped for every one that advanced. The number of shares changing hands in companies listed on the gauge was 43 percent less than the average over the past 30 days, according to data compiled by Bloomberg. BP Plc and Total SA led energy companies lower. Chr. Hansen A/S, the maker of natural food colors and cheese cultures, climbed 7.5 percent in Copenhagen after reporting earnings that exceeded estimates. Futures on the S&P 500 (SPX) declined after the index completed the biggest three-day rally of the year. U.S. equity and bond markets are closed today for the Independence Day holiday. A report on July 6 is forecast to show that U.S. employers added 90,000 people to payrolls in June, after a gain of 69,000 in May, according to a Bloomberg survey of 78 economists. Alcoa Inc., America’s biggest aluminum producer, is due to kick off the U.S. earnings-reporting season on July 9. The euro fell 0.2 percent against the yen, dropping versus 12 of its 16 major peers. It weakened to 8.722 krona and touched 8.7089 krona, the least since March 1, after Sweden’s central bank left its key interest rate unchanged. Bunds Gain The yield on five-year German debt fell four basis points to 0.52 percent and reached 0.51 percent, the lowest since June 19. Credit-default swaps insuring Spanish bonds rose five basis points to 498. Copper fell to $7,727 a metric ton and Brent oil declined to $99.63 a barrel. The MSCI Emerging Markets Index (MXEF) fell less than 0.1 percent. The Hang Seng China Enterprises Index of mainland companies slipped 0.3 percent. Russia’s Micex Index (INDEXCF) dropped 0.7 percent and Poland’s WIG20 Index sank 0.8 percent. The Kospi Index gained 0.4 percent in South Korea as Hyundai Motor Co. (005380) rose 1.7 percent on their U.S. vehicle sales. Benchmark indexes gained 0.9 percent in Indonesia and 0.4 percent in South Africa. To contact the reporters on this story: Stephen Kirkland in London at skirkland@bloomberg.net; Chua Baizhen in Beijing at bchua14@bloomberg.net To contact the editor responsible for this story: Stuart Wallace at Swallace6@bloomberg.net

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