The euro strengthened while German bonds and copper fell on speculation the European and Chinese central banks are weighing rate increases. Portuguese stocks and bonds rose after a bailout agreement. U.S. futures advanced. The euro appreciated 0.3 percent against the dollar at 10:20 a.m. in London. The German two-year note yield rose three basis points, pushing the difference with 10-year bunds to the least since January 2009. Portugal’s two-year yield tumbled 69 basis points. The Shanghai Composite Index plunged 2.3 percent, the biggest drop among equity markets worldwide. Standard & Poor’s 500 Index futures rose 0.1 percent, and the Stoxx Europe 600 Index slipped less than 0.1 percent. Copper fell 1.4 percent and silver futures retreated 1 percent. Interest-rate futures are signaling European Central Bank President Jean-Claude Trichet will map out more increases in borrowing costs at the end of a policy meeting tomorrow. The People’s Bank of China said in a report yesterday that stabilizing prices and managing inflation expectations are “critical.” “The ECB will carefully ponder the pros and cons of higher rates down the road and will most likely unveil its tightening plans for the remainder of the year,” Markus Ernst, a strategist at UniCredit SpA in Munich, wrote in a note to investors. The euro appreciated 0.4 percent versus the yen, and rose 0.2 percent against the Swiss franc. New Zealand’s dollar weakened versus all 16 of its most-traded counterparts after a report showed the nation had the biggest net outflow of residents in more than 10 years in March. The Dollar Index, which tracks the U.S. currency against those of six trading partners, snapped a two-day gain, falling 0.2 percent. Interest-Rate Futures The yield on the 10-year German bund climbed two basis points. The implied yield on the three-month Euribor futures contract expiring in December advanced four basis points to 2.15 percent as traders added to bets that the ECB will raise its main refinancing rate. The yield on the five-year U.S. Treasury note increased two basis points. Ten-year bonds led Portuguese debt higher, with the yield sliding 18 basis points, after the government announced an agreement late yesterday on a 78 billion-euro ($116 billion) three-year loan package. The difference in yield versus bunds dropped 20 basis points to 610 basis points, the least since April 21. The country’s benchmark PSI-20 Index of stocks jumped 1.7 percent, the most in four months. Rio Tinto, Vestas Wind Energy and mining were the worst-performing industries in the Stoxx Europe 600. Rio Tinto Group, the world’s third-largest mining company, lost 1.2 percent. Copper fell as much as 1.8 percent to $9,178 a metric ton, the lowest since March 15, and crude oil was down 0.3 percent at $110.69 a barrel. Vestas Wind Systems A/S, the world’s largest wind-turbine maker, tumbled 7.5 percent after reporting a wider-than- estimated loss. Anheuser-Busch InBev NV sank 3 percent as the world’s largest brewer reported volume that missed projections. BNP Paribas SA, France’s biggest bank, climbed 3.2 percent after profit rose. The gain in S&P 500 futures indicated the index will rebound from two days of losses. Green Mountain Coffee Roasters Inc. surged 17 percent in Germany after boosting its 2011 forecast and announcing plans to sell common stock in a public offering. Las Vegas Sands Corp. (LVS) plunged 8.8 percent in early New York trading as the casino company’s earnings missed estimates. Service industries in the U.S. probably accelerated in April, a sign the biggest part of the economy is weathering increases in fuel prices, economists said before an Institute of Supply Management report due at 10 a.m. New York time. The ISM’s index of non-manufacturing companies rose to 57.5 from 57.3 in March, according to a Bloomberg survey. Another report may show companies added 198,000 workers to payrolls last month. China, Pakistan The MSCI Emerging Markets Index declined 0.7 percent, heading for a two-week low. The Shanghai Composite retreated to the lowest level since Feb. 23. Pakistan’s benchmark Karachi Stock Exchange 100 Index sank 2 percent, the most since March 18, on speculation the U.S. may reduce aid after the killing of Osama bin Laden. Poland’s WIG20 Index slid 0.9 percent as a gauge of manufacturing unexpectedly slowed in April. Crude oil halted a two-day slide before a weekly report on U.S. inventories due at 10:30 a.m. in Washington. Brent crude for June settlement on the London-based ICE Futures Europe exchange traded at $122.68 a barrel, up 23 cents. Silver futures dropped 43.5 cents to $42.15 an ounce, bringing the decline in three days to 14 percent. Rice dropped 0.3 percent to $15.345 for 100 pounds a bushel. To contact the reporter on this story: Stephen Kirkland in London at skirkland@bloomberg.net. To contact the editor responsible for this story: Paul Sillitoe at psillitoe@bloomberg.net

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