SF: European Stocks Slide With Bonds as Yen Weakens, Gold Declines
Dec. 12 (Bloomberg) -- European and Asian stocks slid to a two-month low, euro-area government bonds declined and India’s rupee weakened. The yen snapped a two-day rally and gold fell.
The Stoxx Europe 600 Index declined 0.7 percent to 311.04 at 7:37 a.m. in New York and touched the lowest level since Oct. 14. The MSCI Asia Pacific Index tumbled 0.9 percent. Standard & Poor’s 500 Index futures were little changed after the gauge slumped the most in a month in New York yesterday. Spanish note yields climbed from near an eight-year low. India’s rupee fell, Ukraine’s hryvnia dropped and the yen slipped 0.3 percent versus the dollar. Gold for immediate delivery lost 1.3 percent.
More economists are predicting the Federal Reserve will taper its stimulus as soon as next week and U.S. retail-sales data today will add to signs of growth, according to analyst estimates. Chinese policy makers meet this week to set growth targets for 2014 while central banks in Indonesia, New Zealand, South Korea and Switzerland maintained their benchmark interest rates today. European Central Bank policy maker Peter Praet said assessing sovereign-bond risks in a stress test may discourage banks from using ECB funds to load up on government debt.
“According to various sources, tapering is expected between January and March, so earlier could have some negative impact,” Christoph Riniker, head of strategy research at Julius Baer Group Ltd. in Zurich, said in an interview. “Our view is that there is no year-end rally as the performance in the year was very good and investors are too optimistic at the moment.”
Peugeot Charge
European stocks fell for a third day, following the S&P 500 lower. The U.S. equity benchmark dropped 1.1 percent yesterday, extending its decline after European markets closed.
John Wood Group Plc plunged 11 percent after predicting that earnings from its engineering division will probably drop 15 percent in 2014. PSA Peugeot Citroen slid 8.4 percent after saying it will take a 1.1 billion-euro ($1.5 billion) charge. The French carmaker said its partnership with General Motors Co. will generate smaller savings than it had forecast.
Ziggo NV jumped 7.3 percent as the Dutch broadband provider said that Liberty Global Plc has revived talks to buy the company. People familiar with the matter said the U.S. cable TV operator may make a bid before the end of this year.
The MSCI Emerging Markets Index fell 0.9 percent, set for its lowest close in almost a month, amid concern the Fed will reduce stimulus. The Philippine’s PSEi Index slumped 2.1 percent, the most since Sept. 30.
Fed Taper
The U.S. central bank may begin reducing its $85 billion of monthly bond purchases at its Dec. 17-18 meeting, according to 34 percent of economists surveyed Dec. 6 by Bloomberg, up from 17 percent in a Nov. 8 poll.
Retail sales rose 0.6 percent in November, the most since June, a separate Bloomberg survey showed before a Commerce Department report. Initial jobless claims probably rose to 320,000 in the week to Dec. 7 from 298,000 in the preceding week, another report may show.
Spain’s five-year yield increased six basis points, or 0.06 percentage point, to 2.65 percent. It fell to 2.52 percent yesterday, the lowest since 2005. The rate on similar-maturity Italian securities increased six basis points today to 2.66 percent.
The ECB’s Praet, in an interview with the Financial Times published today, said if the Comprehensive Assessment put pressure on banks in a way that forced them to cut lending, the central bank could act by providing more liquidity.
Euro-area industrial production fell 1.1 percent in October, after contracting 0.2 percent in September, data today showed.
Yen Slides
The yen weakened to 102.74 per dollar, taking this year’s losses to 16 percent. Japan’s currency slipped 0.3 percent to 141.60 per euro. The euro traded at $1.3782.
New Zealand’s dollar climbed 0.6 percent to 83.05 U.S. cents after slipping 0.7 percent yesterday. It added as much as 0.7 percent against Australia’s dollar to NZ$1.0883, the strongest level since October 2008. Reserve Bank of New Zealand Governor Graeme Wheeler said the economy’s strength means he may raise the official cash rate 2.25 percentage points within 2 1/4 years after holding it at a record-low 2.5 percent today.
The Indian rupee weakened 0.9 percent, heading for its biggest drop in a month and the worst performer among 24 developing-nation currencies monitored by Bloomberg.
Ukraine’s hryvnia weakened for a third day, slumping as much as 0.2 percent to a 13-month low of 8.2875 against the dollar. The U.S. said it’s considering sanctions against the country after riot police tried to clear thousands of anti- government activists off the streets of the capital Kiev.
U.S. natural gas advanced 1.5 percent, the fourth consecutive increase, before a government report today that economists said will show lower inventories for last week. Gold declined to $1,236.10 an ounce in London.
The cost of insuring against losses on corporate bond rose for a third day, with the Markit iTraxx Europe Index of credit- default swaps on 125 investment-grade companies increasing 0.4 basis point to 78.5 basis points, the highest sine Dec. 6.
--With assistance from John McCluskey and Adam Haigh in Sydney, Tracy Withers and Emma O’Brien in Wellington and Will Hadfield, Claudia Carpenter, Ash Kumar and Inyoung Hwang in London. Editors: Paul Dobson, Stuart Wallace
To contact the reporters on this story: David Yong in Singapore at dyong@bloomberg.net; Paul Dobson in London at pdobson2@bloomberg.net
To contact the editor responsible for this story: Stuart Wallace at swallace6@bloomberg.net
