BLBG:Euro Strengthens Before ECB Lending as Bond Risk, Oil Drop; Futures Gain
The euro strengthened and bond risk declined before the European Central Bank provides a second round of unlimited funds tomorrow to support banks. European stocks pared gains, while Brent crude fell for a second day.
The euro appreciated 0.3 percent to $1.3437 at 6:45 a.m. in New York and the cost of insuring European sovereign bonds fell to the lowest in a week. The Stoxx Europe 600 Index gained 0.1 percent after climbing 0.4 percent. Standard & Poor’s 500 Index futures added 0.3 percent. The difference in yield between two- and 10-year Italian debt widened to the most since June 2009. Brent oil retreated 0.7 percent to $123.26 a barrel.
European banks will probably tap the ECB for 470 billion euros ($632 billion) in three-year funds in its long-term refinancing operation, according to a Bloomberg News survey of analysts. Italy sold 3.75 billion euros of a new 10-year bond at 5.5 percent, meeting its target for the auction. Consumer confidence may have increased this month, economists said before data from the Conference Board.
“In the short term, the LTRO operation should be risk- and euro-supportive,” said Jeremy Stretch, head of currency strategy at Canadian Imperial Bank of Commerce in London. “The liquidity that the operations have injected into the market has reduced some of the solvency fears, particularly in the European banking market, and that’s provided a much better risk environment.”
Three shares gained for every two that fell in the Stoxx 600. (SXXP) PSA Peugeot Citroen jumped 7.9 percent after people familiar with the matter said that the Paris-based carmaker may announce a plan to sell a 7 percent stake to General Motors Co. this week.
Persimmon Jumps
Persimmon Plc surged 13 percent for the biggest gain on the Stoxx 600 (SXXP) after the U.K.’s largest housebuilder by market value said it plans to return 1.9 billion pounds ($3 billion) to shareholders by 2021.
KBC Groep NV (KBC), Belgium’s biggest bank and insurer by market value, rallied 5.1 percent after announcing an agreement with Banco Santander SA to merge their Polish banking units.
The gain in U.S. index futures indicated that the S&P 500 will climb for a fourth day. A measure of consumer confidence will increase to 63 in February from 61.1 last month, according to economists surveyed before the Conference Board’s report at 10 a.m. in New York. A Commerce Department report due at 8:30 a.m. in Washington may show durable-goods orders declined in January, economists said.
The euro appreciated 0.3 percent against the yen, while the Dollar Index (DXY), which tracks the U.S. currency against those of six trading partners, declined 0.2 percent.
Debt Sales
The Portuguese bond due in April 2021 rose, sending the yield down 13 basis points. The Italian 10-year bond yield fell six basis points, while the nation’s two-year yield dropped eith basis points. The yield on the Belgium’s two-year note slipped four basis points as the government sold 3.01 billion euros of short-term debt, meeting its target for the auction, as borrowing costs fell to the lowest level in 20 months.
The Markit iTraxx SovX Western Europe Index of contracts on 15 governments dropped three basis points to 343.5, the lowest in a week.
Gold for immediate delivery gained for the first time in three days, climbing as much as 0.6 percent to $1,777.48 an ounce, on signs investment demand increased. Futures gained 0.1 percent in New York. Copper rose a third day to a two-week high, gaining as much as 0.7 percent.
Emerging Markets
The MSCI Emerging Markets Index (MXEF) rose 0.9 percent. The BSE India Sensitive Index (SENSEX) climbed 1.6 percent on lower oil. South Korea’s Kospi rose 0.6 percent. Hynix Semiconductor Inc. (000660), the world’s No. 2 maker of computer-memory chips, jumped 6.8 percent to a nine-month high and Samsung Electronics Co. (005930) added 1.2 percent after their Japanese competitor Elpida Memory Inc. filed for bankruptcy.
Hungary’s BUX Index jumped 1.1 percent as Gedeon Richter Nyrt., the country’s biggest drugmaker, rose the most in almost five months after saying its antipsychotic drug helped patients with schizophrenia. Kredyt Bank SA (KRB), the Polish unit of KBC, jumped 16 percent on plans to merge with Santander’s Bank Zachodni WBK SA. (BZW) Zachodni slid 4.7 percent.
To contact the reporters on this story: Stephen Kirkland in London at skirkland@bloomberg.net; Lynn Thomasson in Hong Kong at lthomasson@bloomberg.net
To contact the editor responsible for this story: Stuart Wallace at swallace6@bloomberg.net
