BLBG: Europe Stocks Rise With Spanish, Italian Bonds on Greece
(Bloomberg) -- European stocks rose to a seven-year high as Spanish and Italian bonds gained amid speculation that Greece and its creditors may be moving toward a compromise. Emerging-market currencies weakened before the Federal Reserve releases minutes of its last meeting, while Britain’s pound strengthened.
The Stoxx Europe 600 Index advanced 0.8 percent by 6:13 a.m. in New York, while Standard & Poor’s 500 Index futures were little changed. Spain’s 10-year yield fell six basis points to 1.55 percent and Italy’s dropped to 1.61 percent. The Malaysian ringgit and Indonesian rupiah led declines against the dollar. Sterling jumped against its 16 major peers after the jobs market strengthened. Oil retreated for the first time in four days before U.S. data forecast to show crude inventories increased to highest in more than 30 years.
Banks led stocks higher after a person familiar with the matter said Greece may seek a six-month extension of a loan agreement as soon as today. The loan agreement is different to the existing bailout, a Greek government official said. Investors will be looking for signs as to when the Fed will increase interest rates after policy makers said last month they would be “patient” in their decision.
“Markets like certainty -- if Greece nails down this six-month loan extension, that will bring a little more certainty at least in the short term,” said Darren Hepworth, the Leeds, U.K.-based global trading director at TD Direct Investing (Europe) Ltd. “It’s not just the Greece situation” driving markets higher, he said. “You’ve had a sustained period of low inflation and low interest rates with a fall in oil prices.”
Banks Climb
Four shares advanced for every one that declined in the Stoxx 600, with trading volume 13 percent higher than the 30-day average, according to data compiled by Bloomberg.
Greece’ ASE Index advanced 1.9 percent for its first gain in three days as Piraeus Bank SA and National Bank of Greece SA climbed more than 5 percent.
Credit Agricole SA advanced 3.4 percent after France’s third-largest bank posted fourth-quarter earnings that beat analysts’ estimates.
PSA Peugeot Citroen rose 3.6 percent after the carmaker reported its first annual profit in three years. Vivendi SA gained 1 percent after receiving an offer of 3.9 billion euros ($4.4 billion) for its 20 percent stake in Numericable-SFR from the cable company and Altice France.
Carlsberg A/S dropped 3.8 percent after naming a new chief executive officer and said currency devaluation in Russia and Ukraine will put significant pressure on performance this year. The world’s fourth-biggest brewer reported fourth-quarter earnings that missed analysts’ estimates.
Housing Starts
In the U.S., reports will probably show housing starts slipped in January, while industrial production climbed, according to Bloomberg surveys of economists.
Marriott International Inc. and Williams Cos. are among 11 S&P 500 companies reporting earnings on Tuesday. Housing starts slipped in January, while industrial production climbed, reports may show. The Federal Reserve will release minutes of its last meeting.
Russian stocks rose with the dollar-denominated RTS index advancing 1.9 percent, while the ruble slipped 0.2 percent.
Ukraine’s hryvnia slid 2.6 percent, and the government $2.6 billion of July 2017 bonds fell for a fourth day to a two-week low of 53.23 cents on the dollar, sending the yield to 42.26 percent.
Rebels in eastern Ukraine said they took over the strategic crossroad town Debaltseve and hundreds of government troops surrendered in fighting that’s undermining a truce. Ukraine’s military denied soldiers had surrendered and said fighting was taking place in the town’s outskirts.
Putin Talks
Hungarian stocks advanced for a second day after Prime Minister Viktor Orban and Russian President Vladimir Putin agreed late on Tuesday to help companies including refiner Mol Nyrt. expand their investments.
The Jakarta Composite Index of stocks climbed 1.2 percent to a record, bonds gained and the rupee weakened. Bank Indonesia lowered its reference rate to 7.5 percent from 7.75 percent after local markets closed Tuesday, a move not predicted by any of the 20 economists surveyed by Bloomberg.
The Hang Seng China Enterprises Index of mainland companies listed in Hong Kong increased 0.6 percent, a fifth day of gains and the longest rally in six months. The city’s stock market shut from noon today and will reopen on Feb. 23, while mainland exchanges are closed through Feb. 24 for the Lunar New Year holidays.
Bonds Rally
Greece’s government bonds rose for the first time in three days. The three-year note yield dropped 119 basis points to 17.36 percent. The rate on 10-year debt declined 37 basis points to 9.87 percent. It reached 11.40 percent on Feb. 2 amid concern the nation would fail to reach a funding agreement. That compares with as high as 44.21 percent in 2012 when Greece underwent the biggest debt restructuring in history.
Credit-default swaps insuring $10 million of Greek government debt for five years were little changed at $4.3 million upfront and $100,000 annually, signaling a 71 percent probability of default, according to CMA.
The rate on 10-year Portuguese debt reached 2.278 percent on Wednesday, the lowest since Bloomberg began collecting the data in 1997. German 10-year bonds were little changed with the yield at 0.38 percent and the rate on 10-year Treasury notes was at 2.14 percent.
Average yields on high-grade bonds in euros held within one basis point of a record low of 0.93 percent, Bank of America Merrill Lynch index data show.
U.K. Inflation
Sterling strengthened 0.5 percent to $1.5430. The U.K. jobless rate fell to 5.7 percent, its lowest rate in more than six years, in the fourth quarter. Other reports showed average earnings rose more than economists estimated and the Bank of England said it sees inflation rising “fairly sharply” as the effects of weaker oil prices fade.
The yen fluctuated, trading at 119.28 per dollar after BOJ Governor Haruhiko Kuroda said the central bank won’t hesitate to adjust policy if the underlying trend in inflation changes. Earlier, the BOJ said Japan will continue a moderate recovery, while declining energy prices will limit increases to the rate of inflation.
West Texas Intermediate oil slipped 1.4 percent to $52.76 a barrel. Brent crude, the benchmark for more than half of the world’s oil, fell 1.9 percent to $61.35 a barrel.
Stockpiles probably gained by 3 million barrels through Feb. 13, according to a Bloomberg News survey of analysts before an Energy Information Administration report on Thursday. Supplies climbed the prior five weeks to 417.9 million, the most in records dating back to August 1982.
Wheat for May delivery rose for a third day, adding 0.9 percent to $5.3675 a bushel on the Chicago Board of Trade. The contract rose to a four-week high of $5.45 a bushel on Tuesday.
