Italy and Spain led bonds higher as European Union finance chiefs struck an agreement on how to handle failing banks and investors awaited further signals on Federal Reserve stimulus. Commodities rebounded, Chinese money-market rates fell and the yen weakened against its major peers. The yield on Italy’s 10-year bonds dropped 15 basis points to 4.55 percent at 7:24 a.m. in New York. The Standard & Poor’s GSCI gauge of 24 raw materials jumped 0.4 percent and China’s seven-day repurchase rate fell for a fifth day. The yen depreciated 0.5 percent to 98.18 per dollar. The Stoxx Europe 600 Index slipped 0.1 percent and S&P 500 index futures advanced 0.2 percent. EU ministers agreed on guidelines for assigning losses to private creditors and regulating public assistance as well as establishing a role for the euro area’s 500 billion-euro ($65 billion) firewall fund. Global equities have lost more than $3 trillion this month as the Fed said it may pare asset purchases and investors speculated that rising Chinese funding costs will curb growth. Consumer spending in the U.S. probably rose at the fastest pace in three months and jobless claims declined, economists said before reports today. “The overall theme that we should expect from the Fed will be a message not to panic and bond markets are stabilizing,� said Padhraic Garvey, head of developed-markets debt strategy at ING Groep NV in Amsterdam. “There’s still some way to go on the EU banking deal but we’re on the right track.� Bonds Gain Italian bonds rose for a second day as the nation sold 5 billion euros ($6.5 billion) of five- and 10-year securities, matching its maximum target. Spain’s 10-year yield dropped eight basis points to 4.76 percent and the rate on similar-maturity German bunds slipped four basis points to 1.73 percent. Treasury 10-year note yields fell two basis points to 2.52 percent after dropping seven basis points yesterday. New York Fed President William C. Dudley and Atlanta Fed President Dennis Lockhart are scheduled to speak today. Volatility in Treasuries as measured by the Bank of America Merrill Lynch MOVE index fell for a second day yesterday. The measure dropped to 103.46 after reaching 110.98 on June 24, the highest since November 2011. It has averaged 62.25 this year. Securities in the Bank of America Merrill Lynch Global Broad Market Sovereign Plus Index lost 2 percent this quarter through yesterday, set for the worst performance since the three months through Dec. 31, 2010. While the average yield on the securities has climbed to 1.74 percent from 1.43 percent on March 31, it is still below the mean of 2.06 percent for the past five years. Trimming Losses West Texas Intermediate oil rose 0.2 percent to $95.65 a barrel, bringing the drop this quarter to 1.6 percent. Oil trading in New York was 8.2 percent below the average for the past 100 days, according to data compiled by Bloomberg. Nickel jumped 1.3 percent and silver gained 0.8 percent. The yen weakened 0.6 percent to 127.89 per euro. The dollar slipped 0.1 percent to $1.3027 per euro. The pound fell for a third day against the dollar, losing 0.2 percent to $1.5286, as a report showed disposable income in the U.K. plunged the most in 25 years in the first quarter. South Africa’s rand rose versus all of its 16 major peers. It’s the second-worst performer of 16 major currencies this quarter, with only the Australian dollar falling more. The euro has climbed versus all of its 16 major peers in the period. The JPMorgan Global FX Volatility Index slipped to 11.38 percent after touching 11.96 percent on June 24, the highest since June 2012. The average for 2013 is 9.18 percent. Low Volume Three stocks advanced for every two that fell in the Stoxx 600, which had rallied 3.2 percent over the previous two days for the biggest jump in almost 11 months. Subsea 7 SA tumbled 16 percent, the most in 4 1/2 years, as the oilfield-services provider cut its earnings forecast. The number of shares changing hands in Stoxx 600-listed companies was 11 percent less than the average of the past 30 days, according to data compiled by Bloomberg. The gauge has retreated 5.5 percent this month and 3.2 percent this quarter, trimming its annual increase to 1.7 percent. The S&P 500’s advance of 1 percent yesterday trimmed its June decline to 1.7 percent. The index is up 2.2 percent in the second quarter and 12 percent in 2013. Increased Spending U.S. consumer spending probably increased 0.3 percent in May, after falling 0.2 percent the previous month, according to the median forecast in a Bloomberg survey. The Commerce Department data will also show incomes grew 0.2 percent last month after being unchanged in April, according to the Bloomberg poll. Jobless claims fell by 9,000 to 345,000 in the week ended June 22, the Labor Department is projected to say, according to a separate survey. The MSCI Emerging Markets Index rose for a third day, adding 1.4 percent, paring this quarter’s loss to 12 percent and declines for the year to 13 percent. That compares with a quarterly drop of 0.4 percent for the MSCI World Index of developed countries, which is 6.8 percent higher in 2013. South Korea’s Kospi gauge jumped 2.9 percent, the most in nine months, after the current-account surplus widened to a record in May and the government raised its economic growth forecast. India’s Sensex advanced 1.8 percent and the rupee gained after the country’s current-account gap narrowed more than forecast. China’s seven-day repo rate fell 55 basis points to 6.74 percent, according to a weighted average compiled by the National Interbank Funding Center. It reached a record 12.4 percent on June 20 and rose 193 basis points this month. To contact the reporters on this story: Richard Frost in Hong Kong at rfrost4@bloomberg.net; Stephen Kirkland in London at skirkland@bloomberg.net To contact the editors responsible for this story: Justin Carrigan at jcarrigan@bloomberg.net;

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