BLBG:Stocks Climb to 17-Month High as Yen Falls Versus Euro
Stocks rose to a 17-month high and the yen weakened on speculation U.S. leaders will reach a budget deal and Japan’s central bank will expand stimulus. The euro strengthened after German business confidence increased.
The MSCI All-Country World Index (MXWD) gained for a third day, up 0.4 percent at 12:05 p.m. in London, to the highest since July 2011. Futures on the Standard & Poor’s 500 Index advanced 0.2 percent. Japan’s Topix Index rallied 2.8 percent for the biggest jump in 21 months, while 10-year government note yields rose 2 basis points. The yen depreciated against 15 of its 16 major peers, while the euro reached a seven-month high against the dollar. Lead climbed to a 15-month high.
House Speaker John Boehner offered a backup plan that would raise tax rates for Americans making more than $1 million a year, as he seeks compromise between fellow Republicans and the government. The Bank of Japan (8301) is considering more stimulus at a two-day meeting ending tomorrow. German business confidence increased for a second month in December, signaling Europe’s largest economy may support a euro-area recovery next year.
“U.S. lawmakers will be able to avoid the worst-case scenario,” said Kazuyuki Terao, Tokyo-based chief investment officer of Allianz Global Investors Japan Co., whose parent Allianz SE (ALV) oversees about 1.7 trillion euros ($2.3 trillion). Japan’s “new leadership is showing its resolve that the government and the BOJ will join forces to beat deflation.”
Stocks Advance
The Stoxx Europe 600 Index advanced 0.5 percent as banks and construction companies climbed. Merck KGaA lost as much as 3.4 percent after its Stimuvax drug missed the main goal in a trial with lung-cancer patients. The gauge is up 15 percent this year.
Germany’s Ifo institute’s business climate index, based on a survey of 7,000 executives, climbed to 102.4 from 101.4 in November. That’s the second straight increase after sentiment dropped to a 2 1/2-year low in October. Economists predicted a reading of 102, according to the median of 43 forecasts in a Bloomberg News survey.
Ten-year bund yields rose to the highest level in more than two weeks, advancing two basis points, or 0.02 percentage point, to 1.43 percent, after increasing to 1.44 percent, the highest since Dec. 3.
Greece’s ASE Index rallied 2.8 percent, the biggest gain in a week, after Standard & Poor’s lifted the nation’s credit rating from selective default. The company cited the completion of Greece’s distressed debt buyback and the determination of euro-zone member states to preserve its membership in the bloc. Greek 10-year bonds rose for a third day, with the yield falling 73 basis points to 12.09 percent.
U.S. Futures
S&P 500 futures gained before a Commerce Department report at 8:30 a.m. in Washington may show new-home construction fell from a four-year high in November. Housing starts dropped 2.5 percent to an 872,000 annual rate, according to a Bloomberg survey of 85 economists.
Volumes on the Topix were double their 30-day average at the close. Canon Inc. (7751), which counts Europe as its biggest market, climbed 6.5 percent. Toyota Motor Corp. (7203) added 3.5 percent. The shares also rose after Nikkei newspaper reported Asia’s biggest carmaker plans to boost vehicle production next year to 9.9 million units.
The yen fell 0.6 percent to 112.10 per euro, the weakest since Aug. 8, 2011. Japan’s currency declined 0.2 percent to 84.43 per dollar. The euro was 0.3 percent stronger at $1.327, the highest since May 1.
The yen is on track to weaken against 15 of its 16 major peers this year, losing the most against the Mexican peso and New Zealand dollar. The euro advanced 2.4 percent against the dollar so far this year and about 11 percent against the yen.
Emerging Markets
Emerging market stocks rose to the highest in eight months after the World Bank increased its growth forecast for East Asia. The MSCI Emerging Market Index added 0.6 percent, extending its advance this year to 15 percent. The BSE India Sensex 30 Index gained as much as 0.8 percent, the highest level since April 2011, before paring gains to 0.6 percent as investors speculated India will cut interest rates next month. The gauge is up 26 percent this year.
The Philippine Stock Exchange Index jumped 2.1 percent, the most in six months, after the government forecast “robust” first-half economic growth. Thailand’s SET (SET) Index climbed 1.1 percent to the highest since February 1996.
Developing East Asia will probably grow 7.5 percent this year, compared with a previous 7.2 percent forecast, and expand 7.9 percent in 2013, the World Bank said, predicting 40 percent of this year’s global growth will come from the region.
Lead rose as much as 1.2 percent to $2,347.75 a metric ton, the highest since Sept. 19, 2011. Prices of the metal used in car batteries are up 15 percent this year. Tin climbed as much as 1.4 percent to $23,847 a ton, the most since March 16. Natural gas slumped 1.5 percent and oil in New York advanced 0.4 percent to $88.31 a barrel. The S&P GSCI gauge of 24 commodities is down 0.3 percent this year.
To contact the reporter on this story: Michael Shanahan in London at mshanahan3@bloomberg.net
To contact the editor responsible for this story: Sandy Hendry at shendry@bloomberg.net
