BLBG:Euro Weakens on France Rating Cut; Yen Gains as Copper Drops
The euro weakened as France lost its top credit rating with Moody’s Investors Service and the region’s finance ministers prepared for talks on Greece’s debt. Copper fell while shares were little changed.
The euro fell 0.3 percent against the yen, which rallied from near its weakest in seven months versus the dollar. Copper retreated 0.4 percent in London, paring yesterday’s advance. The Stoxx Europe 600 Index slid less than 0.1 percent at 8:24 a.m. in London while futures on the Standard & Poor’s 500 Index dropped 0.2 percent.
Moody’s cut France to Aa1 from Aaa and maintained a negative outlook for Europe’s second-largest economy. Euro-area finance ministers will meet today to try to plug a hole in Greece’s public accounts and win over the International Monetary Fund. Sales of previously owned U.S. homes unexpectedly rose in October, according to data yesterday, while a report today may show housing starts capped the best two months in four years.
“The euro is being sold on the back of France’s downgrade,” said Marito Ueda, senior managing director in Tokyo at FX Prime Corp. “The news was somewhat expected, so it’s unlikely the euro will tumble, but it would certainly keep it under downward pressure while the market looks for where the next downgrade would be.”
The MSCI All-Country World Index (MXWD) climbed 2 percent yesterday, the most since July, amid optimism a deal will be reached to avoid automatic U.S. spending cuts and tax increases. Federal Reserve Chairman Ben S. Bernanke is scheduled to address the Economic Club of New York today.
Bank Division
Credit Suisse Group AG, the second-biggest Swiss bank, sank 2.2 percent percent after saying it will reorganize its investment bank and merge asset management with the private bank to save costs.
The MSCI Asia Pacific Index (MXAP) added 0.1 percent. A gauge tracking technology companies gained 0.8 percent after Apple Inc. rallied 7.2 percent in New York. Lee & Man Paper Manufacturing Ltd. jumped 11 percent in Hong Kong after reporting net income rose in the first half.
Olam International Ltd. (OLAM), the commodities trader part owned by Singapore’s state-owned investment company, tumbled 5.8 percent in the city-state after short-seller Carson Block questioned the company’s accounting methods.
The euro fell 0.3 percent to 104 yen and declined to $1.2783. The shared currency retreated against 10 of its 16 major counterparts and traded at $1.2807, down 0.1 percent.
France Rating
“France’s fiscal outlook is uncertain as a result of its deteriorating economic prospects, both in the short term due to subdued domestic and external demand” and “structural rigidities” in the longer term, Moody’s said. France was also cut one level to AA+ from AAA on Jan. 13 by Standard & Poor’s.
The yen rallied after the Bank of Japan kept policy unchanged at the end of a two-day meeting today. The currency added 0.3 percent to 81.21 per dollar after yesterday sliding to 81.59, the weakest since April 25.
Recycling European Central Bank profits on Greek bonds, charging the country lower interest rates and extending repayment deadlines are among the options under consideration today for filling the new gap in Greece’s public accounts.
Officials said the meeting, starting at 5 p.m. in Brussels, won’t make a final decision to release the next tranche of aid to Greece, partly because parliaments in Germany, the Netherlands and Finland have yet to weigh in.
Existing U.S. home sales increased 2.1 percent to a 4.79 million annual rate, figures from the National Association of Realtors showed yesterday, exceeding the median forecast of economists surveyed by Bloomberg News.
Property Forecast
Housing starts probably totaled an annualized 840,000 units in October, following 872,000 in September, another survey indicated before the Commerce Department reports the figure today. The increase would cap the best two-month performance since 2008.
Copper for delivery in three months dropped 0.4 percent to $7,773.50 a ton in London Metal Exchange trading, following yesterday’s 2.6 percent advance. Tin added 0.1 percent.
Crude for January delivery declined 0.5 percent to $88.80 a barrel. Futures climbed 2.7 percent yesterday as Israeli ground forces honed preparations to enter the Gaza Strip for the first time in almost four years.
To contact the reporters on this story: Richard Frost in Hong Kong at rfrost4@bloomberg.net;
To contact the editor responsible for this story: Rocky Swift at rswift5@bloomberg.net
