BLBG:European Shares Climb as Oil Declines, Kiwi Weakens
European shares advanced for a sixth day in the longest winning streak this year as corporate bond risk fell while oil declined. New Zealand’s currency declined and U.S. milk futures climbed after an exporter said some shipments may contain a bacteria that can cause botulism.
The Stoxx Europe 600 Index added 0.3 percent to 305.08 at 6:54 a.m. in New York, paring gains of as much as 0.6 percent. Standard & Poor’s 500 Index futures fell less than 0.1 percent after the U.S. gauge climbed to a record last week. Corporate bond risk slid to a 10-week low. The yen gained 0.5 percent to 98.50 per dollar and the Bloomberg U.S. Dollar Index, which tracks the greenback against its 10 major counterparts, slipped 0.1 percent. New Zealand’s dollar lost at least 0.8 percent against its 16 main peers and milk futures climbed 2 percent in Chicago. Oil dropped 0.6 percent.
Euro-area services output shrank at a slower pace than initially estimated in July, London-based Markit Economics said today before data from the U.S. that will probably show growth in service industries picked up. An index of China’s non-manufacturing sectors in July increased for the first time since March. Federal Reserve Bank of Dallas President Richard Fisher will speak today on the U.S. economy in Portland, Oregon.
“We’re finally seeing economic data picking up,” Andrea Williams, who helps oversee $76 billion as head of European equities at Royal London Asset Management, said by phone. “The U.S. is still delivering strong data and core Europe is OK. The valuation of the market is still supportive.”
Lloyds Gains
The Stoxx 600 climbed to the highest level in nine weeks as all but three of the 19 industry groups advanced, while trading volumes were 31 percent less than the 30-day average.
Lloyds Banking Group Plc rose 3.9 percent as the Financial Times reported that the lender plans to pay as much as 70 percent of profit as dividends by 2015. PostNL NV, the biggest Dutch postal operator, declined 10 percent, the most since January, after second-quarter sales missed analysts’ estimates.
HSBC Holdings Plc, Europe’s largest bank, slid 4.1 percent after earnings trailed projections and Chief Executive Officer Stuart Gulliver said the lender’s fast-growing emerging markets are slowing.
The S&P 500 closed at an all-time high of 1,709.67 on Aug. 2. Berkshire Hathaway Inc. Class B shares advanced 1.2 percent in German trading as Warren Buffett’s company reported second-quarter profit that beat analysts’ estimates
A report at 10 a.m. New York time may show growth in U.S. service industries picked up in July. The Institute for Supply Management’s non-manufacturing index rose to 53.1 from June’s 52.2, according to the median forecast of 60 economists surveyed by Bloomberg. Readings above 50 signal growth.
Emerging Markets
The MSCI Emerging Markets Index advanced for a third day, climbing 0.3 percent. The Shanghai Composite jumped 1 percent. A measure of China’s non-manufacturing sector gained to 54.1 in July from 53.9 in June, government data showed Aug. 3. A services index from HSBC and Markit Economics was unchanged at 51.3, a separate report showed today.
New Zealand’s dollar fell 1 percent to 77.60 U.S. cents, after touching 76.93, the lowest since July 8. China and Russia halted imports of some milk powder from New Zealand’s Fonterra Cooperative Group Ltd. after the largest dairy exporter warned of a contaminated ingredient. Fonterra said on Aug. 3 that three batches of the product made last year may contain the bacteria.
Australia’s 10-year bond yield declined 19 basis points, or 0.19 percentage point, to 3.61 percent. The one-year note yield fell 13 basis points to 2.18 percent, after reaching a record low of 2.14 percent. Retail sales growth unexpectedly stalled in June, data showed before a central bank meeting. The Reserve Bank of Australia will probably cut the benchmark interest rate to 2.5 percent tomorrow, according to the median of 27 estimates in a Bloomberg survey of economists.
Bond Risk
Ten-year Treasury yields rose two basis points to 2.62 percent, while the rate on similar-maturity German bunds was little changed at 1.65 percent.
The cost of insuring against losses on corporate bonds declined today, with the Markit iTraxx Europe Index of credit-default swaps on 125 investment-grade companies decreasing 1.4 basis points to 94.7 basis points, the lowest since May 23.
Oil fell for a second day to $106.29 a barrel in New York and Brent crude slid 0.5 percent to $108.41. Libya reopened a terminal closed by protests and Iranian President Hassan Rohani pledged in his inaugural speech to take a moderate approach.
U.S. natural gas futures fell as much as 0.9 percent to $3.318 per million British thermal units, the lowest since Feb. 25, before trading at $3.335 on the New York Mercantile Exchange amid forecasts for below-average temperatures this month.
Coal for 2014 delivery dropped for a seventh day to an all-time low, sliding 0.2 percent to $83 a metric ton, broker data compiled by Bloomberg show.
-- With assistance from Yoshiaki Nohara in Tokyo, Emma Charlton, Inyoung Hwang, Lars Paulsson, Andrew Rummer and Shelley Smith in London. Editors: Stephen Kirkland, Justin Carrigan
To contact the reporters on this story: Jae Hur in Tokyo at jhur1@bloomberg.net; Stephen Kirkland in London at skirkland@bloomberg.net
To contact the editor responsible for this story: Stuart Wallace at swallace@bloomberg.net
