BLBG:Euro Gains As German Bonds Decline; Stocks Pare Losses
The euro strengthened for the first time in five days against the dollar and German bonds retreated as Italy sold all the debt it planned at an auction and Greece’s economy shrank less than economists estimated. Stocks and U.S. equity-index futures swung between gains and losses.
The euro appreciated 0.5 percent to $1.2354 at 7:25 a.m. in New York. The 10-year German bund yield rose five basis points, while the rate on similar-maturity Italian debt lost three basis points. The Stoxx Europe 600 Index slid less than 0.1 percent. Standard & Poor’s 500 Index futures added 0.1 percent. Shares sank the most in four weeks in Shanghai as Bank of America Corp. cut its growth outlook for China. Brent crude rose 1.7 percent, wheat slipped 1.3 percent and copper fell 0.6 percent.
Italy sold 8 billion euros ($9.8 billion) of one-year bills at a yield of 2.767 percent, up from 2.697 percent at the previous auction. Greece’s economy contracted 6.2 percent in the second quarter, compared with 7 percent forecast in a Bloomberg survey. Stocks dropped earlier after Japan said growth slowed more than economists anticipated.
“Demand held up well” at Italy’s auction, Nicholas Spiro, managing director of Spiro Sovereign Strategy in London, said in an e-mailed comment. “Borrowing costs more or less held steady, which, all things considered, is probably not a bad result.”
The cost to insure against a default by Italy using credit swaps fell four basis points. Investors bid for 1.69 times the amount of 364-day bills offered today, up from 1.55 times on July 12.
The euro gained against all 16 of its most traded counterparts, advancing 0.2 percent against the yen.
Julius Baer
The Stoxx 600 was little changed after capping 10 weeks of gains last week. Standard Chartered Plc added 1.5 percent after Reuters reported that the bank has discussed a settlement with the New York regulator that accused it of concealing transactions with Iranian banks.
Julius Baer Group AG dropped 5.3 percent, its biggest slide in almost three months, after agreeing to pay about 860 million Swiss francs ($879 million) to buy the wealth-management business outside the U.S. of Bank of America’s Merrill Lynch unit. Nokia Oyj retreated 2.1 percent as Danske Bank A/S said the mobile-phone maker may soon sell new shares.
The advance in U.S. futures indicated the S&P 500 will extend five weeks of gains.
Federal Reserve Bank of San Francisco President John Williams said it’s time to move ahead with a third round of asset purchases, according to the San Francisco Chronicle.
Mideast Tensions
Oil rose 0.8 percent in New York amid concern that political tension in the Middle East may lead to supply disruption. Futures climbed as much as 0.9 percent after the U.S. said one of its guided-missile destroyers collided with an oil tanker near the Strait of Hormuz in the Persian Gulf.
Israel will hold home defense drills this week as the Haaretz daily reported that the nation is considering a strike against Iran over its nuclear program. The shekel tumbled 1.2 percent against the dollar.
The MSCI Emerging Markets Index dropped 0.3 percent after four weeks of gains. The Shanghai Composite Index lost 1.5 percent as Bank of America cut its 2012 growth forecast for China to 7.7 percent from 8 percent. South Korea’s Kospi Index slipped 0.7 percent. Russia’s Micex Index rose 0.8 percent.
To contact the reporter 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
