BLBG: European Stocks Fall on Economy, Iraq as Copper Advances
European stocks fell as Iraq fighting intensified and data showed weakness in euro-area manufacturing and services. U.S. stocks were little changed amid deals activity, while copper rallied on China factory orders.
The Stoxx Europe 600 Index fell 0.4 percent at 9:33 a.m. in New York. The Standard & Poor’s 500 Index dropped less than 0.1 percent after the gauge closed at a record last week. The yield on 10-year Treasuries fell 1 basis points to 2.60 percent. Copper advanced 0.9 percent and zinc increased 0.8 percent. The Australian dollar strengthened against 15 of its 16 major peers. Dubai stocks entered a bear market.
Fighters from an al-Qaeda breakaway group seized all Iraq’s border crossings with Jordan and Syria. Reports showed euro-area manufacturing and services activity retreated this month amid a further slowdown in France’s economy, while Chinese manufacturing rose to a seven-month high in June. U.S. sales of existing homes probably increased in May, economists said before data from the National Association of Realtors.
“Bullish sentiments are muted due to geopolitical risk,” said Manish Singh, who helps oversee about $2 billion as head of investments at Crossbridge Capital in London. “A deterioration in euro-area manufacturing, especially in France, where it continues to be a major drag, as well as increasing uncertainty in Iraq, which begets higher oil prices and hurts consumption, are a drag on the market.”
The S&P 500 rose 1.4 percent last week, the most in two months, closing at an all-time high of 1,962.87. It is heading toward an increase of 4.8 percent for the quarter. The Dow average also ended the week at a record. Federal Reserve Chair Janet Yellen said accommodative monetary policy, rising property and equity prices and the improving global economy should lead to above-trend growth.
Inflation Concern
Yellen emphasized the need to put more Americans back to work and downplayed concerns about asset-price bubbles and incipient inflation.
Integrys Energy Group Inc. jumped 12 percent after Wisconsin Energy Corp. agreed to pay $5.7 billion for the company. Micros Systems rose 3.3 percent as Oracle Corp. offered to buy it for a $68 a share. General Electric Co. added 0.2 percent after clinching the $17 billion purchase of Alstom SA’s energy assets, its biggest acquisition ever.
The National Association of Realtors report at 10 a.m. New York time may show that previously owned U.S. home purchases climbed to a 4.74 million annualized rate in May, according to economists in a Bloomberg News survey. They rose to a 4.65 million rate the previous month.
Sixteen of the 19 industry groups in the Stoxx 600 fell, with trading volumes 15 percent less than the 30-day average, data compiled by Bloomberg show. The gauge gained 0.3 percent last week, closing 0.5 percent short of a six-year high.
Missing Estimates
The euro-area PMI composite gauge slipped to 52.8 in June, less than the 53.4 reading from the median of 25 estimates in a Bloomberg survey of economists.
Distribuidora Internacional de Alimentacion SA advanced 2.1 percent after the Spanish discount grocer said it would sell its French business to Carrefour SA.
The MSCI Emerging Markets Index declined 0.1 percent. India’s Sensex dropped 0.3 percent. Dubai’s benchmark gauge retreated 4.3 percent by the close, extending declines from a peak in May to more than 20 percent, the threshold for a bear market.
The ruble gained 0.5 percent versus the dollar while Russia’s Micex index dropped 0.2 percent. Russian President Vladimir Putin voiced support June 21 for a cease-fire in Ukraine declared by the former Soviet republic’s new president, Petro Poroshenko.
China Demand
The S&P GSCI gauge of commodities climbed as much as 0.6 percent to the highest level since Aug. 28, before reversing gains as oil slid. Copper rose to $6,901 a metric ton. Zinc rallied as much as 0.8 percent to $2,195 a ton, the highest since February 2013.
A preliminary Purchasing Managers’ Index for China, the biggest consumer of industrial metals, rose to 50.8, exceeding the 49.7 median estimate of analysts in a Bloomberg survey, according to a report by Markit and HSBC Holdings Plc.
Australia’s dollar climbed 0.5 percent to 94.37 U.S. cents after rising to 94.45, the strongest since April 10. New Zealand’s currency advanced 0.3 percent to 87.28 U.S. cents after reaching 87.49, the highest since May 6. China is Australia and New Zealand’s biggest trading partner.
The euro weakened against all but two of its 16 major counterparts, slipping 0.2 percent versus the yen.
The rate on 10-year Treasury notes fell 1 basis point to 2.60 percent.
To contact the reporters on this story: Yoshiaki Nohara in Tokyo at ynohara1@bloomberg.net; Stephen Kirkland in London at skirkland@bloomberg.net
To contact the editors responsible for this story: Stuart Wallace at swallace6@bloomberg.net; Lynn Thomasson at lthomasson@bloomberg.net Jeff Sutherland, Stephen Kirkland
