BLBG:Euro Climbs Before ECB As Stocks Fluctuate; Spain Bonds Advance
The euro strengthened before a policy announcement from the 17-nation currency union’s central bank. European stocks were little changed, while Spain’s 10-year bonds gained after the government sold more debt than it planned.
The euro appreciated 0.4 percent to $1.2274 at 10:05 a.m. in London. The yield on Spain’s 10-year bond fell seven basis points, while Italy’s slid 11 basis points. The Stoxx Europe 600 Index increased 0.1 percent after losing as much as 0.1 percent. Standard & Poor’s 500 Index futures added 0.2 percent, while emerging-market stocks ended the longest rally in three months. Copper advanced 0.2 percent and natural gas lost 0.4 percent.
European Central Bank President Mario Draghi pledged last week to do “whatever it takes” to preserve the euro, raising expectations for today’s policy decision. The Federal Reserve signaled its readiness to support the U.S. economy even as it refrained from adding to bond purchases yesterday. Jobless claims probably rose last week, economists said before Labor Department data that precede tomorrow’s monthly payrolls report.
“What is different this time is that Draghi seems to signal a change in the ECB’s target,” said Ramin Nakisa, an allocation strategist at UBS AG in London. “We no longer expect a deterioration of the sovereign crisis in Europe. We’re waiting with a neutral position on European equities to see whether he follows through with actions.”
ECB Decision
The euro appreciated 0.3 percent versus the yen, rising against a majority of its 16 most-traded peers. The Swedish krona strengthened 0.2 percent versus the 17-nation currency and gained 0.5 percent against the dollar.
The ECB will keep its main rate at a record low 0.75 percent, according to the median forecast of 55 analyst estimates compiled by Bloomberg News. The Bank of England will also keep its key rate unchanged at an all-time low 0.5 percent, and hold its asset-purchase program target at 375 billion pounds ($582 billion), separate surveys show.
The pound was little changed at $1.5528 and weakened 0.3 percent to 78.94 pence per euro.
The extra yield investors demand to hold Spanish 10-year bonds instead of benchmark German bunds narrowed eight basis points to 5.28 percent. Spain sold 3.13 billion euros ($3.8 billion) of debt, exceeding the target of 3 billion euros.
The Stoxx 600 is on course for a ninth straight week of gains, the longest winning streak since January 2006. Societe Bic SA, the French manufacturer of pens, advanced 5.9 percent today after reporting an increase in second-quarter profit and revenue. D.E Master Blenders 1753 (DE) tumbled 7.3 percent after the beverage business spun off from the former Sara Lee Corp. said it will restate earnings because of accounting irregularities and tax provisions at its Brazilian operations.
Default Risk
The cost of insuring European corporate debt declined to the lowest in four months, with the Markit iTraxx Crossover Index of credit-default swaps on 50 mostly junk-rated European companies falling four basis points to 615.
The S&P 500 (SPX) has declined for three straight days, bringing this week’s retreat to 0.8 percent. Abercrombie & Fitch Co., the teen retailer with more than 1,000 stores, plunged 14 percent in German trading after cutting its annual forecast, citing an anticipated drop in same-store sales in the second half of 2012. Knight Capital Group Inc. climbed 5.8 percent, rebounding from a 33 percent slide. The shares tumbled yesterday as Knight as a systems breakdown forced it to advise some clients to route orders elsewhere.
A Labor Department report at 8:30 a.m. in Washington may show U.S. initial jobless claims climbed to 370,000 last week, from 353,000 the previous period, according to the median forecast of 46 economists in a Bloomberg survey. Separate data will probably show that growth in factory orders slowed in June.
Natural Gas
Natural gas futures fell for a third day to $3.158 per million British thermal units. Copper climbed to $7,453 a metric ton after dropping 1.8 percent yesterday. Brent oil in London rose 0.4 percent to $106.34 a barrel.
The MSCI Emerging Markets Index (MXEF) retreated 0.6 percent, snapping a five-day rally. The Hang Seng China Enterprises Index (HSCEI) lost 1 percent, its steepest drop since July 23. The Shanghai Composite Index slipped 0.6 percent, as Poly Real Estate Group Co. (600048), China’s second-largest property developer, tumbled 9.2 percent, the most since April 2010. India’s Sensex Index declined 0.4 percent.
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
