European stocks fell, U.S. index futures erased earlier gains and bunds rebounded on concern sputtering growth in Greece and Spain will hamper the region’s German-led expansion. The Stoxx Europe 600 Index slipped 0.5 percent at 7:24 a.m. in New York. Standard & Poor’s 500 Index futures dropped 0.3 percent, after gaining as much as 0.9 percent. The yield on the 10-year bund lost one basis point to 2.42 percent, while the premium investors demand to hold Greek 10-year bonds instead of German debt of similar maturity rose to 800 basis points for the first time since June 28. The yen strengthened against all but one of its 16 major counterparts. Spanish banks borrowed a record 130.2 billion euros ($167.2 billion) from the European Central Bank in July as investors shun the debt-ridden nation’s lenders. Almost $2 trillion has been wiped from the value of global equities since the Federal Reserve said the pace of recovery in the world’s biggest economy will probably be “more modest” than forecast on Aug. 10. Stocks rallied earlier after Germany reported gross domestic product grew at the fastest pace in two decades. “This is a market that remains averse to risk, and especially to sovereign risk,” said Vincent Treulet, chief investment strategist at BNP Paribas Investment Partners in Paris. “We have got a moderately bearish view on equities.” Almost three stocks fell for every one that rose in the Stoxx 600. Delhaize Group led retail stocks lower, slumping 8.3 percent after cutting its profit forecast as a decline in U.S. same-store sales accelerated. Retail Sales The drop in U.S. futures indicated the S&P 500 may extend the biggest three-day decline since July 1 that send the gauge 3.9 percent lower. Reports today may show retail sales increased, while consumer prices, confidence and inventories were restrained. U.S. retail purchases increased 0.5 percent after a 0.5 percent drop in June, according to the median estimate of 77 economists surveyed by Bloomberg News before the Commerce Department report, due at 8:30 a.m. in Washington. Separate reports may show consumer prices in July rose 0.2 percent, the first gain in four months, while consumer confidence probably rose to 69 in August after 67.8 in July, the Reuters/University of Michigan confidence index may show at 9:55 a.m. A 10 a.m. report may show business inventories rose 0.2 percent in June after a 0.1 percent gain. Treasury 10-year notes rose, with the yield decreasing two basis points to 2.73 percent, before government data that economists said will show a cost-of-living gauge held at a four- decade low, adding to signs the economic recovery is stalling. headed for a weekly decline. Consumer prices excluding food and energy rose 0.9 percent in July from the year before, matching the smallest increase since 1966, a Bloomberg survey showed. Spain, Italy Debt Spanish bond yields climbed 8 basis points to 4.29 percent. Spain’s borrowing rose 3.1 percent from 126.3 billion euros in June, according to daily averages compiled by the Bank of Spain. The yield on Italy’s 10-year government bonds rose 7 basis points to 3.90 percent as the government sale of 2015 and 2025 debt. The yen gained 0.2 percent to 85.75 versus the dollar on speculation increasing demands from politicians to weaken the currency may be ignored by the Bank of Japan. It also advanced versus the euro, reversing an earlier decline.

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