BLBG:Stocks, Euro Decline on Economy as Spanish Yield Tops 6%
European stocks fell the most in two months and the euro weakened as Spain’s 10-year yields rose above 6 percent, spurring concern the debt crisis is worsening. Oil retreated for a third day, while Treasuries extended the longest rally since 2008.
The Stoxx Europe 600 Index (SXXP) lost 1.3 percent at 6:40 a.m. in New York. Futures on the Standard & Poor’s 500 Index slipped less than 0.1 percent after the gauge sank the most in three months yesterday. The euro fell 0.3 percent to $1.2864 and Spain’s 10-year yields jumped 28 basis points to 6.02 percent. U.S. Treasuries rose for an eighth day, the longest run of gains since December 2008. Oil retreated 0.7 percent and copper slid 1.1 percent.
Germany, the Netherlands and Finland said late yesterday Spain should bear the cost of problems in their banks, with the European Stability Mechanism assuming only a limited burden in recapitalizations. The Bank of Spain said the economy kept falling at a “significant pace” in the third quarter and reports showed French consumer confidence dropped for a third month in September and Italian retail sales declined in July. Federal Reserve Bank of Philadelphia President Charles Plosser said yesterday more bond purchases probably won’t boost growth.
“There’s an ongoing drip feed of negative news,” said Richard McGuire, a fixed-income strategist at Rabobank International in London. The ESM announcement “appears to cast some doubt as to whether Spain will be able to disburden itself of the liabilities it will assume via its banking bailout.”
ICAP Drops
Automakers and banks led losses on the Stoxx 600, as all 19 industry groups retreated. ICAP Plc fell 4.2 percent after the world’s largest broker of transactions between banks forecast first-half revenue will declined 14 percent. Imagination Technologies Group Plc, a U.K. designer of parts for Apple Inc.’s iPhone, sank 8.2 percent as Reuters reported that Texas Instruments Inc. will shift the focus of its wireless investment away from smartphones.
The S&P 500 has fallen for four straight days, the longest losing streak since Aug. 2. A report at 10 a.m. New York time is projected to show sales of new U.S. homes increased 2.2 percent in August, according to a Bloomberg survey of economists.
The euro fell against 14 of its 16 major peers, dropping as much as 0.7 percent versus the yen.
Spain’s two-year note yield jumped 21 basis points to 3.37 percent, and the yield on similar-maturity Italian debt climbed 13 basis points to 2.46 percent.
The yield on 10-year Treasuries dropped three basis points to 1.64 percent, the lowest since Sept. 10. Rates on similar- maturity German bunds dropped seven basis points to 1.51 percent and 10-year U.K. gilt yields slid eight basis points to 1.74 percent.
Default Risk
The Markit iTraxx SovX Western Europe index of credit- default swaps on 14 governments increased 4 basis points to 141.5, the highest level in a week.
Oil fell to $90.74 a barrel. The S&P GSCI gauge of 24 commodities declined 0.6 percent.
The MSCI Emerging Markets Index (MXEF) dropped 1.6 percent, trimming this month’s gain to 4.5 percent. The Hang Seng China Enterprises Index of mainland companies traded in Hong Kong and the Shanghai Composite Index both fell 1.2 percent. Russia’s Micex Index lost 1.6 percent and India’s Sensex slipped 0.6 percent. Benchmark gauges in Poland, Thailand, Indonesia, Hungary and the Czech Republic lost at least 1 percent.
To contact the reporter on this story: Stephen Kirkland in London at skirkland@bloomberg.net; Jason Clenfield in Tokyo at jclenfield@bloomberg.net;
To contact the editor responsible for this story: Stuart Wallace at Swallace6@bloomberg.net
