BLBG:European Stocks Decline as Surging Borrowing Costs Fuel Euro Debt Concern
European stocks declined as surging borrowing costs for Italy, France and Spain deepened concern that euro-area leaders are struggling to contain the debt crisis. U.S. index futures and Asian shares retreated.
Infineon Technologies AG (IFX), Europe’s second-largest semiconductor maker, slumped 5.7 percent after it said sales will decline in 2012. Vivendi SA (VIV) rose 1.8 percent. Carlsberg A/S, the world’s fourth-biggest brewer, dropped 1.2 percent after Goldman Sachs Group Inc. cut its recommendation on the shares.
The Stoxx Europe 600 Index lost 0.5 percent to 235.76 at 8:03 a.m. in London. The benchmark measure has declined 19 percent from this year’s high on Feb. 17 as policy makers struggle to contain a crisis that has Greece on the edge of a default and the region’s other highly indebted nations grappling with record bond yields. Futures on the Standard & Poor’s 500 Index expiring in December lost 0.9 percent. The MSCI Asia Pacific Index tumbled 1.4 percent.
“Investors remain cautious amid spiking European debt yields,” Stan Shamu, a market strategist at IG Markets in Melbourne, wrote. “The focus is turning to Spain and France after their yields spiked overnight.”
The extra yield investors demand to hold 10-year bonds from France, Belgium, Spain and Austria instead of German bunds all climbed to euro-era records. Italy’s 10-year yield rose above 7 percent as prime minister-in-waiting Mario Monti wrapped up talks on forming a new government. Spanish two-year notes opened lower today, with the yield rising 4 basis points.
Italy’s New Leader
Italy’s Monti will announce his new government today as he strives to convince investors he can trim Europe’s second- biggest debt and fend off contagion from the debt crisis.
The premier-designate concluded two days of talks with political leaders yesterday in a bid to gain broad support for a Cabinet tasked with pushing through an overhaul of the currency region’s third-biggest economy.
In the U.S., a report today may show the cost of living was little changed in October. At the same time, manufacturing growth is being sustained. Production at the nation’s factories, mines and utilities increased 0.4 percent in October, according to economists’ estimates.
Lundin Petroleum AB, Sweden’s oil and natural gas producer, is among shares that will be added to MSCI Inc.’s global indexes after a semi-annual review. The changes will be made at the close of Nov. 30, according to an MSCI statement.
To contact the reporter on this story: Adria Cimino in Paris at acimino1@bloomberg.net.
To contact the editor responsible for this story: Andrew Rummer at arummer@bloomberg.net.
