BLBG:Asian Stocks, Oil Drop On Signs Europe Slump Is Worsening
The yen strengthened against all of its major peers, U.S. Treasuries gained and default risk on sovereign debt rose as the European Central Bank meets to review interest rates. Spanish bonds stayed lower after an auction.
The yen appreciated 0.4 percent versus the euro at 10:38 a.m. in London. The yield on the 10-year Treasury note fell three basis points to 1.60 percent as trading resumed following the Independence Day holiday. Spain’s 10-year yield climbed above 6.5 percent for the first time in almost one week. The Stoxx Europe 600 Index (SXXP) added 0.2 percent and futures on the Standard & Poor’s 500 Index were little changed.
The ECB will probably reduce its benchmark interest rate to a record-low 0.75 percent today, while the Bank of England will step up bond purchases that boost the supply of pounds, according to Bloomberg surveys of economists. Spain sold 3 billion euros ($3.8 billion) of bonds today, meeting its maximum target. U.S. service industries probably grew in June at a slower pace and jobless claims stayed close to the highest level of 2012, economists said before reports today.
“The markets are in a risk-off mode because they are looking at fundamentals,” said Niels From, chief analyst at Nordea Bank AB in Copenhagen. “Central banks will have to do more. There’s concern that the economies are continuing to slow and that unemployment is rising.”
VW, Porsche Deal
The Stoxx 600 is on course for a fifth straight week of gains, the longest winning streak since January. Volkswagen AG jumped 5.9 percent and Porsche SE rose 0.5 percent after VW reached an agreement with Germany’s tax authorities to buy the 50.1 percent stake in Porsche that it doesn’t already own. GKN Plc surged 13 percent as the U.K. maker of parts for Airbus SAS jetliners agreed to buy the aircraft-engine unit of Volvo AB for 633 million pounds ($987 million).
The S&P 500 closed at a two-month high on July 3. The Institute for Supply Management’s index of non-manufacturing businesses is due for release at 10 a.m. New York time. The gauge fell to 53 last month from 53.7 in May, according to the median forecast of 69 economists surveyed by Bloomberg. Readings greater than 50 signal expansion.
ADP Employer Services, which compiles a private report on payrolls, will say today that U.S. jobs growth slowed to 100,000 in June from 133,000 in May, a Bloomberg survey showed. Government data on nonfarm payrolls tomorrow are forecast to show an increase of 90,000 workers for June after a 69,000 gain in May, according to the median estimate in a separate survey.
The yen gained at least 0.2 percent against its 16 major peers, advancing 0.2 percent versus the dollar. The euro slipped 0.2 percent to $1.2499.
Debt Protection
The cost of insuring against default on sovereign debt rose for a second day. The Markit iTraxx SovX Western Europe Index of credit-default swaps linked to 15 governments climbed five basis points to 274.5.
Spain’s 10-year bond yield climbed 13 basis points to 6.54 percent, the highest since June 29. The country sold 10-year securities at an average yield of 6.43 percent today, compared with 6.044 percent at a sale in June. It also sold debt maturing in 2015 and 2016.
The rate on Ireland’s January 2014 note was little changed at 4.83 percent as the government sold 500 million euros of three-month bills in its first auction since the country agreed to a 67.5 billion euro bailout in November 2010.
U.K. 10-year gilts rose for a second day, pushing the 10- year yield three basis points lower to 1.70 percent. German 10- year bond yields were little changed at 1.46 percent after reaching a two-week low of 1.44 percent.
Brent rose 0.7 percent to $100.50 a barrel. Raw sugar futures in New York climbed as much as 1.7 percent to a two- month high on crop delays in Brazil, the world’s largest producer.
To contact the reporters on this story: Stephen Kirkland in London at skirkland@bloomberg.net; Glenys Sim in Singapore at gsim4@bloomberg.net
