SF: U.S. Futures Decline as Spanish Bonds Drop; Oil Falls
March 2 (Bloomberg) -- European stocks and U.S. index futures fell and the euro weakened as Spain raised its budget deficit target for 2012 and German retail sales unexpectedly declined. Bond risk rose and oil declined.
The Stoxx Europe 600 Index lost 0.2 percent at 7:45 a.m. in New York. Standard & Poor's 500 Index futures slid 0.4 percent. Spain's 10-year yield increased for the first time in three days and the cost of insuring European sovereign bonds rose for the first time in four days. The 10-year German bund yield slipped four basis points to 1.83 percent. The Dollar Index rose 0.6 percent, while oil retreated 0.8 percent to $107.96 a barrel.
Spanish Prime Minister Mariano Rajoy announced a new deficit goal of 5.8 percent of gross domestic product compared with the 4.4 percent target previously agreed with the European Union. Sales in Germany declined 1.6 percent from December, compared with a 0.5 percent gain predicted by economists, the Federal Statistics Office said today.
"There is still some concern about softness in the euro- region economy and as long as there is uncertainty about this, that keeps German yields anchored," said Rasmus Rousing, a fixed-income strategist at Credit Suisse Group AG in Zurich. The European Central Bank's liquidity operations "helped peripheral bonds a lot but there are still risks out there," he said.
Euro-area finance ministers authorized yesterday the region's bailout fund to issue bonds for the Greek debt restructuring, the first step in releasing funds from the rescue package.
Deficit Target
Spain's 10-year bond yield rose three basis points. Spain raised its budget deficit target for 2012 as a deepening economic slump hampers efforts to rein in the euro area's fourth-biggest shortfall.
"I didn't communicate the deficit target to the heads of state, nor do I have to," Rajoy said after a summit of European leaders in Brussels today. "This is a sovereign decision taken by Spain and I will communicate it to the commission in April, just like the rest of the countries."
The yield on Italy's 10-year bond fell less than one basis point, after climbing 10 basis points. The price of the security climbed for the eighth successive week, the longest run since a nine-week streak ended March 1998. Italy's economy expanded 0.4 percent last year, topping a 0.3 percent forecast, the national statistics office said.
Default Risk
The Greek 10-year bond tumbled for the third day, driving the yield 133 basis points higher to 37.76 percent, with the price falling to 18.21 percent of face value.
The Markit iTraxx SovX Western Europe Index of credit- default swaps on 15 governments climbed five basis points to 342.
The euro slid 0.5 percent to $1.3241, falling for the third straight day. The yen depreciated 0.5 percent against the dollar, leaving it lower for the fourth consecutive week, the longest run of declines since November 2010.
The retreat in U.S. index futures indicated the S&P 500 will pare yesterday's 0.6 percent advance.
The S&P GSCI gauge of 24 commodities fell 0.4 percent, heading for the first weekly retreat in four weeks. Gold for immediate delivery dropped 0.2 percent to $1,715.18 an ounce in London, on track for a 3.2 percent loss this week, the steepest weekly decline in 2 1/2 months.
The MSCI Emerging Markets Index pared gains, rising less than 0.1 percent as gauges in Russia, South Africa and Poland declined. The Shanghai Composite Index rose 1.4 percent amid speculation the government may introduce policies to support economic growth at a national congress next week. Vietnam's VN Index increased 2.7 percent to the highest close since Sept. 23, after the chairman of the market regulator signaled that borrowing costs will fall.
