SD: Stocks Fall for Third Day as Yen Strengthens; Spain Bonds Drop
March 6 (Bloomberg) -- Stocks fell for a third day, the longest stretch in two months, and commodities retreated while the yen strengthened as concern mounted the global economy is slowing. Spanish bonds declined and U.S. Treasuries gained.
The MSCI All-Country World Index lost 0.8 percent at 7:40 a.m. in New York. Standard & Poor’s 500 Index futures slipped 0.8 percent. The yen appreciated against all 16 of its most- traded peers, climbing 0.6 percent versus the dollar. The yield on the Spanish 10-year bond rose eight basis points, with the similar-maturity U.S. Treasury note yield falling five basis points. Copper declined 2.1 percent and oil slid 0.6 percent.
Europe’s economy contracted 0.3 percent in the fourth quarter, the European Union’s statistics office said, confirming an earlier estimate. Data yesterday showed U.S. factory orders declined and China announced the lowest growth target since 2004. Private investors that so far declared their participation in Greece’s debt restructuring hold about 20 percent of the bonds involved in a swap deal that ends March 8.
“The euro zone faces a very difficult year with very large amounts of austerity hitting the economy,” Marie Diron, senior economist at Oxford Economics Ltd. in London, said in an interview on Bloomberg Telvision today. While Greece may not get the 90 percent takeup it was looking for, there will probably be a “large” participation, she said.
The Stoxx 600 Europe Index slid 1.4 percent, extending yesterday’s 0.6 percent decline as automakers and producers of industrial goods retreated. PSA Peugeot Citroen dropped 4.6 percent as Europe’s second-biggest carmaker announced plans to sell 1 billion euros of shares. Cable & Wireless Worldwide Plc slid 5.9 percent as the Telegraph in London said Vodafone Group Plc may not make a takeover offer.
Spread Widens
The drop in S&P 500 futures indicated the benchmark gauge for U.S. stocks will slide for a third day.
The yield on the 10-year German bund fell four basis points to 1.78 percent, leaving the difference in yield between Europe’s benchmark government securities and Spanish debt 12 basis points wider, increasing for the third straight day. Italy’s 10-year yield rose six basis points. The yield on the Portuguese two-year note jumped 16 basis points.
Greece sold 1.137 billion euros of 26-week Treasury bills today with a uniform yield of 4.8 percent with investors bidding for 2.63 times the securities offered, the debt management agency said. The European Financial Stability Facility sold 3.44 billion euros of three-month debt at an average yield of 0.0516 percent.
The cost of insuring European sovereign bonds rose for a third day, with the Markit iTraxx SovX Western Europe Index of credit-default swaps on 15 governments climbing five basis points to 352.
Yen Strengthens
The yen climbed 1.3 percent against the euro, strengthening for the fifth consecutive day, the longest run of gains in more than two months. The euro depreciated 0.6 percent to $1.3134. Australia’s dollar dropped 0.7 percent versus the greenback after the nation’s central bank kept interest rates unchanged and said it has scope to ease policy if needed. The New Zealand dollar weakened against all but four of its 16 major counterparts after a report showed the country’s budget deficit widened more than the government had estimated.
The MSCI Emerging Markets Index fell 1.4 percent, taking its two-day drop to 2.7 percent. Russia’s Micex Index slid 3 percent, the most this year, after more than 200 people were detained in protests against Vladimir Putin’s presidential election victory yesterday.
The Hang Seng China Enterprises Index of mainland companies listed in Hong Kong sank 3.1 percent, the most since Jan. 18. The BSE India Sensitive Index slipped 1.1 percent and the FTSE/JSE Africa All Share Index fell 1.3 percent in Johannesburg as industrial metals prices slipped.
The S&P GSCI index of 24 commodities slipped 0.7 percent as zinc and lead sank 2.5 percent.
