BLBG: Stocks Rise as EU Ministers Meet; Commodities Drop
European stocks rose as finance ministers met to discuss moves to stem the debt crisis and U.S. leaders prepared for more budget talks. Italian bonds gained, while the dollar fell for a fifth day and commodities dropped.
The Stoxx Europe 600 Index (SXXP) increased 0.3 percent at 7:15 a.m. in New York. Standard & Poor’s 500 Index futures added 0.1 percent. Italy’s 10-year bond yield dropped three basis points to 4.42 percent. The Dollar Index slipped 0.2 percent, headed for its longest slump in more than a year. The S&P GSCI gauge of 24 raw materials slid 0.4 percent as Brent crude slid 0.7 percent and aluminum lost 0.8 percent. European Union carbon permits fell to a record low.
U.S. President Barack Obama’s administration rejected a Republican plan for tackling the fiscal cliff that omitted higher tax rates for top-earning Americans, leaving the issue unresolved with about four weeks left before more than $600 billion in tax increases and federal spending cuts start taking effect. The meeting of European finance chiefs today in Brussels will focus on setting up a common bank supervisor.
“The gap between the two sides remains huge and time to find a compromise remains short, but a ‘kick the can’ fudge to postpone the deadline for agreement remains the most likely outcome,” Kit Juckes, head of foreign-exchange research at Societe Generale SA in London, said in an e-mailed report.
Raising Forecast
Three stocks gained for every two that fell in the Stoxx 600. OC Oerlikon Corp. (OERL), the world’s largest maker of textile machinery, increased 2.5 percent in Zurich after raising its forecast and agreeing to sell natural fibers and textile- components units. United Internet AG sank 7.7 percent as Warburg Pincus, a New York-based private equity firm, offered its 5.5 percent stake in the German phone company for sale.
Futures on the S&P 500 (SPX) erased an earlier drop of as much as 0.3 percent. The yield on the 10-year Treasury note rose one basis point to 1.63 percent.
Economists have cut their forecasts for the yield at the end of this year to the lowest since Bloomberg began surveying for the projection, on concern U.S. politicians will struggle to avert the fiscal cliff. The 10-year rate will probably be 1.64 percent by Dec. 31, less than the 1.75 percent rate that economists saw at the start of November, according to Bloomberg surveys of the predictions.
Dollar Weakens
The dollar depreciated 0.2 percent to $1.3081 per euro after reaching $1.3085, the weakest level since Oct. 18. It dropped 0.3 percent against the yen.
Australia’s dollar rose 0.5 percent to $1.0472 as the central bank said demand outside the mining industry may rise after cutting interest rates to a half-century low of 3 percent. The Swiss franc slipped as much as 0.5 percent to 1.2145 per euro, the weakest level since Sept. 18.
Carbon dioxide permits fell as much as 3.4 percent to 5.75 euros a metric ton, the lowest since they started trading in April 2005 on ICE Futures Europe in London. The European Union commission asked its 27 members to indicate Dec. 13 whether they support a plan to tackle a glut in the market.
The MSCI Emerging Markets Index (MXEF) added less than 0.1 percent, erasing earlier losses. India’s Sensex gained 0.3 percent as Parliament began debating whether to allow overseas supermarkets to enter the country before voting on the issue tomorrow.
The Shanghai Composite Index (SHCOMP) increased 0.8 percent, rebounding from the lowest level since January 2009. The Shanghai Composite will rally 48 percent within nine months after its decline below 1,960 signaled selling has climaxed, according to Tom DeMark, the creator of indicators to show turning points in securities.
Russia’s Micex Index slipped 0.5 percent, Brazil’s Bovespa index sank 0.2 percent, and South Korea’s Kospi lost 0.3 percent.
To contact the reporters 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: Justin Carrigan at jcarrigan@bloomberg.net
