BLBG:Euro Strengthens as IMF Said to Seek Lending-Resource Boost; Copper Gains
The euro strengthened and commodities rallied as an official at a Group of 20 nation said the International Monetary Fund is proposing a $1 trillion expansion of its lending resources. U.S. index futures rose before Goldman Sachs Group Inc. reports earnings.
The euro appreciated 0.6 percent to $1.2818 at 6:38 a.m. in New York. Oil rose 0.8 percent to $101.50 a barrel and the S&P GSCI index of 24 commodities gained for a second day. Standard & Poor’s 500 Index futures added 0.4 percent. Three stocks gained for every two that fell in the Stoxx Europe 600 Index, which was little changed. Portuguese 10-year yields rose four basis points to 14.28 percent after a bill auction.
The IMF is pushing China, Brazil, Russia, India, Japan and oil-exporting nations to be the top contributors, according to the official, who spoke on condition of anonymity because the talks are private. Goldman Sachs, EBay Inc. and Charles Schwab Corp. are among U.S. companies scheduled to report results.
The IMF report “is good news if this becomes a reality,” said Espen Furnes, an Oslo-based fund manager at Storebrand Asset Management, which oversees more than $60 billion. “It seems like a massive number indeed, but it’s still not a big enough number to solve the refinancing need in the euro zone in the upcoming two years. It can however be an important facilitator of the refinancing.”
Greece is close to a deal with private creditors that would give them cash and securities with a market value of about 32 cents per euro of government debt, according to Bruce Richards, who is on the creditors’ committee and chief executive officer for Marathon Asset Management LP.
Cutting Forecast
Stocks fell earlier after the World Bank cut its global growth forecast by the most in three years and Germany lowered its outlook for 2012.
The gain in futures indicated the S&P 500 will advance for a second day. S&P 500 companies, which beat profit estimates in the previous 11 quarters, probably will report a 4.6 percent increase in per-share earnings during the September-December period, according to analysts’ estimates compiled by Bloomberg.
Data from the Federal Reserve at 9:15 a.m. New York time may show U.S. industrial production increased 0.5 percent in December after a 0.2 percent drop the prior month, according to the median estimate of 80 economists in a Bloomberg survey.
Portugal sold 1.25 billion euros ($1.6 billion) of 11-month bills, the longest maturity it has auctioned since the nation sought a rescue last year.
The cost of insuring against default on European corporate debt fell to the lowest in 2 1/2 months. The Markit iTraxx Crossover Index of credit-default swaps on 50 companies with mostly high-yield credit ratings dropped 9.5 basis points to 681.5, the lowest since Oct. 31.
German Auction
German (GDBR2) two-year yields were little changed at 0.18 percent, within five basis points of a record low. The country got bids for 7.596 billion euros of two-year notes at an auction today, compared with a maximum sales target of 4 billion euros, the Bundesbank said in a statement. Ten-year U.S. Treasury yields were little changed at 1.86 percent.
The euro gained against 15 of its 16 major peers, advancing 0.6 percent against the yen. The Dollar Index fell 0.6 percent.
The MSCI Emerging Markets Index rose 0.3 percent, after dropping as much as 0.2 percent. Benchmark gauges in Poland, Hungary and the Czech Republic rose at least 1 percent. The Shanghai Composite Index dropped 1.4 percent after the gauge yesterday rallied the most since October 2009.
To contact the reporters on this story: Stephen Kirkland in London at skirkland@bloomberg.net; Adam Haigh in London at ahaigh1@bloomberg.net.
To contact the editor responsible for this story: Stuart Wallace at Swallace6@bloomberg.net
