BLBG:European Stocks Fall as Yen Advances, Metals Slide
European stocks fell from a five-year high after industrial output contracted more than economists forecast in July. The yen strengthened for a second day against the dollar and gold led metals lower.
The Stoxx Europe 600 Index dropped 0.3 percent at 10:52 a.m. in London, while Standard & Poor’s 500 Index futures lost 0.2 percent. Japan’s currency climbed 0.4 percent to 99.46 per dollar. The Australian dollar fell for the first time in a week and the nation’s bonds rallied after unemployment increased. Indonesia’s rupiah pared losses after the central bank unexpectedly raised rates. Treasury 10-year note yields fell two basis points to 2.90 percent. Gold declined 1.8 percent to $1,340.24 an ounce and copper slid 1 percent.
Factory production in the 17-nation euro area fell 1.5 percent from June, when it gained 0.6 percent, the European Union’s statistics office in Luxembourg said today. The U.S. issues its last jobless claims report before the Federal Reserve reviews monetary policy next week. Bank of England Governor Mark Carney is scheduled to testify to parliament today.
The decline in output “certainly doesn’t bode well for overall activity in the third quarter,” Annalisa Piazza, a fixed-income analyst at Newedge Group in London, said in an e-mailed note. The data “remain sluggish, supporting the idea of a still weak recovery cycle,” she said.
Two shares declined for every one that gained in the Stoxx 600. Cie. Financiere Richemont SA, the world’s largest jewelry maker, fell 3.6 percent in Zurich after sales growth missed estimates. Home Retail Group Plc (HOME) jumped 2.6 percent to a two-year high as the U.K. retailer reported second-quarter sales that exceeded projections. William Morrison Supermarkets Plc rallied 3.3 percent after saying it plans to cut capital expenditure.
Jobless Claims
The decline in S&P 500 (SPX) futures indicated the U.S. gauge will snap a seven-day rally that has pushed the index to a four-week high. A report in the U.S. may show initial claims for jobless benefits increased to 330,000 last week from 323,000 in the previous period, according to a separate survey of economists.
The Fed will probably taper its monthly bond buying by $10 billion at its Sept. 17-18 meeting to $75 billion, according to the median of 34 economists’ estimates collated by Bloomberg News. The stimulus has helped global stocks rally about 30 percent over the past three years and suppressed bond yields.
The MSCI Emerging Markets Index slipped 0.1 percent. The Shanghai Composite Index gained 0.6 percent after Premier Li Keqiang said he would accelerate financial reform. India’s S&P BSE Sensex decreased 0.9 percent, falling for the first time in six-days and Russia’s Micex Index slid 0.6 percent.
Indonesia Rates
Indonesia’s rupiah slipped less than 0.1 percent versus the dollar, after earlier falling as much as 1.6 percent, and one-month non-deliverable forwards extended gains. The central bank raised the reference rate by a quarter of a percentage point to 7.25 percent, the highest in more than four years. South Korea’s won climbed 0.2 percent as the central bank kept its key rate unchanged. Turkey’s lira slipped 0.4 percent after the current-account deficit widened more than forecast in July.
The yen rose after Japan’s machinery orders stagnated in July and amid concern a sales-tax increase will hamper growth, boosting demand for the currency as a haven.
The euro slid 0.2 percent to $1.3289 and lost 0.7 percent against Japan’s currency.
Australia’s dollar fell against all of its 16 major counterparts after the statistics bureau said the number of people employed in the country fell 10,800 last month, following a decline of 11,400 in July. Economists predicted a 10,000 increase in August. Australia’s currency dropped 1 percent to 92.39 U.S. cents.
Kiwi Jumps
New Zealand’s dollar rose for a fifth day, appreciating 0.8 percent to 81.47 U.S. cents, after the Reserve Bank said interest-rate increases “will likely be required next year” as the economy strengthens and inflation picks up.
Silver dropped 2.2 percent, nickel slid 1.1 percent and lead lost 0.9 percent. Corn fell 0.5 percent, the first drop in three days. The U.S. Department of Agriculture will lower its forecast for the corn crop in its monthly forecast scheduled for release at 12 p.m. in Washington, according to 34 analysts and trading firms surveyed
West Texas Intermediate crude rose 0.2 percent to $107.79 a barrel in electronic trading on the New York Mercantile Exchange. Oil gained after Israel said two shells fired from Syria hit southern Golan. Initial evidence showed shelling from Syria was “errant,” the Israeli army said in a text message.
Crude Demand
Demand for crude from the Organization of Petroleum Exporting Countries will be 29.2 million barrels a day or 1.3 million a day lower than the group’s current production levels, the International Energy Agency said today in its monthly market report.
Saudi Arabia’s Oil Minister Ali Al-Naimi said the kingdom will meet additional demand as geopolitical concerns dominate the market. The U.S. and Russia meet today to discuss a plan for Syria to surrender its chemical weapons.
To contact the reporters on this story: Stephen Kirkland in London at skirkland@bloomberg.net; Kyoungwha Kim in Singapore at kkim19@bloomberg.net;
To contact the editor responsible for this story: Stuart Wallace at Swallace6@bloomberg.net
