BLBG:European Stocks Rise With Gold as Dollar Falls; Yen Gains
European stocks rebounded from the biggest decline in a week, the dollar weakened and gold led metals higher before data on the strength of the U.S. economic recovery. Japanese shares tumbled into a correction while the yen appreciated.
The Stoxx Europe 600 Index rose 0.2 percent at 6 a.m. in New York, after tumbling 1.9 percent yesterday. Standard & Poor’s 500 Index futures slipped 0.1 percent. Japan’s Topix Index slid 3.8 percent, taking its decline from the recent peak to more than 10 percent. The yen strengthened 0.4 percent to 100.80 per dollar, advancing for a second day. Gauges of currency-market and Treasuries volatility jumped to the most in almost a year. Italian bond yields fell after the nation sold debt. Gold gained 1 percent.
The U.S. economy probably grew at an annualized 2.5 percent pace in the first quarter, unchanged from a preliminary reading last month, while pending home sales rose in April, economists said before reports today. Fed Chairman Ben S. Bernanke said last week the central bank could reduce the pace of purchases if there is a sustained improvement in growth. Economic confidence in the euro area increased in May, adding to signs the region is beginning to emerge from the longest recession in the single-currency era, the European Commission said today.
“You have to be careful not to be too bearish,” Stewart Richardson, who helps oversee $100 million as chief investment officer at RMG Wealth Management LLP, told Manus Cranny on Bloomberg Television in London. “There are going to be bad days in the market, but there is that belief that the Federal Reserve can always step in.”
Winning Streak
The Stoxx 600 has climbed 2.2 percent in May, heading for a 12th straight month of gains. A gauge of European mining companies climbed the most in a week as Randgold Resources Ltd. and Kazakhmys Plc rose more than 2 percent.
The decline in S&P 500 futures indicated the gauge will trim this month’s 3.2 percent advance. The index is poised for a seventh straight monthly gain, its longest rally since 2009.
The U.S. Commerce Department is due to release its latest estimate of first-quarter growth at 8:30 a.m. in Washington. Separate data from the National Association of Realtors may show pending sales of existing homes increased 1.5 percent in April, matching the previous month’s advance, according to a Bloomberg survey of economists.
Emerging Markets
The MSCI Emerging Markets Index fell 0.4 percent, heading for the biggest monthly loss in a year. The Philippine Stock Exchange Index tumbled 3.8 percent, the most since September 2011, and the Hang Seng China Enterprises Index (HSCEI) of mainland companies listed in Hong Kong sank 0.6 percent.
The dollar weakened against 15 of its 16 major peers, falling most versus the yen, and sending the Dollar Index to the lowest level since May 14. It slipped 0.4 percent to $1.2991 per euro. Europe’s 17-nation shared currency depreciated 0.1 percent to 130.72 yen.
The Aussie gained 0.3 percent to 96.62 U.S. cents after the statistics bureau said building approvals rose 9.1 percent in April. The median estimate of economists in a Bloomberg survey was for a 4 percent increase.
The JPMorgan Global FX Volatility Index climbed to 9.99 percent, the highest since June 28.
Treasury volatility as measured by the Bank of America Merrill Lynch MOVE index rose to 81.22 yesterday, also the highest level since June. The 10-year note yield was little changed at 2.12 percent today after falling five basis points yesterday, and surging 16 basis points the day before.
Italy’s 10-year bond yield fell two basis points to 4.17 percent after touching 4.23 percent, the highest since April 19. The government auctioned 5.75 billion euros ($7.45 billion) of five- and 10-year securities, matching its target.
Gold climbed for a second day, the longest streak since May 3, to $1,406.80 an ounce. Prices are down 4.7 percent this month, after falling 7.6 percent in April when the metal went into a bear market. Lead climbed 0.9 percent and copper advanced 0.7 percent.
The S&P GSCI (SPGSCI) gauge of 24 commodities is down 0.2 percent this month.
To contact the reporters on this story: Stephen Kirkland in London at skirkland@bloomberg.net; Richard Frost in Hong Kong at rfrost4@bloomberg.net;
To contact the editor responsible for this story: Justin Carrigan at jcarrigan@bloomberg.net
