Stocks fell, sending Europe’s benchmark gauge to the lowest level in four months, while the euro weakened and Spanish default risk climbed to a record as investors awaited resolution to Greece’s political impasse. U.S. stock-index futures and precious metals declined.
The Stoxx Europe 600 Index (SXXP) lost 1.1 percent at 7:15 a.m. in New York. Standard & Poor’s 500 Index futures sank 0.9 percent. The euro depreciated 0.3 percent to $1.2969, trading below $1.30 for the third day. The yen advanced against all 16 major peers. Credit-default swaps on Spain rose 13 basis points to 512 and the yield on Italy’s 10-year bond increased 15 basis points. Gold fell 1.3 percent and oil slid for a sixth day, the longest streak in almost two years.
Greece, which has 436 million euros ($566 million) of debt coming due on May 15, is struggling to form a government after weekend elections. Syriza party leader, Alexis Tsipras, told his political rivals they must renounce support for the European Union-led bailout if there’s to be any chance of forging a coalition. Tsipras meets today with leaders of the pro-austerity New Democracy and Pasok parties.
“Until it becomes clearer that an accident in Greece can again be avoided, risk appetite is unlikely to recover,” Christoph Rieger, head of interest-rate strategy at Commerzbank AG in Frankfurt, wrote in a note today.
More than six shares fell for every one that rose in The Stoxx 600. Mediaset SpA sank 11 percent as the broadcaster controlled by former Italian Prime Minister Silvio Berlusconi said first-quarter profit dropped 85 percent on lower advertising sales. Bekaert NV, the world’s largest maker of steel cord for tires, surged 11 percent in Brussels after reporting sales that beat some analysts’ estimates.
Four-Week Low
The drop in S&P 500 futures indicated the U.S. equities gauge will extend declines that have driven it to a four-week low. Green Mountain Coffee Roasters Inc. dropped 2.6 percent in German trading. The company stripped founder Robert P. Stiller of his position as chairman after he sold shares to meet a margin call at a time when its trading policies prohibited such sales.
The MSCI Asia Pacific Index (MXAP) sank 1.3 percent to the lowest level since Jan. 19, with Japan’s Nikkei 225 Stock Average retreating 1.5 percent. The MSCI Emerging Markets Index declined 1.1 percent to the lowest level in almost four months. Benchmark gauges in China and Indonesia lost more than 1 percent and South Korea’s Kospi Index slipped 0.9 percent. Poland’s WIG20 Index fell 0.4 percent, extending declines after the central bank raised interest rates.
Australia Surplus
The euro weakened 0.5 percent versus the yen, falling for the fourth straight day. The Dollar Index, which tracks the U.S. currency against those of six trading partners, rose for the eighth day, the longest run of gains since September 2008. The Australian dollar depreciated 0.4 percent as Prime Minister Julia Gillard said returning the budget to a surplus gives the central bank “maximum room” to adjust interest rates and ease pressure on manufacturers that have been hobbled by currency gains.
The yen strengthened 0.3 percent to 79.63 per dollar, paring its decline for the year to 3.5 percent. The Japanese currency will end the year at 83 versus the dollar, according to the median of 49 analyst forecasts compiled by Bloomberg.
The Greek note due next week is among about 7 billion euros of government bonds issued under foreign rather than domestic law whose holders managed to sidestep losses suffered under the sovereign restructuring in March. Paying the holdouts would rile investors who cooperated with the government, while failing to pay would make Greece the first developed nation to default on its debt.
The 10-year U.S. Treasury yield fell four basis points, dropping for the fourth day, before the government sells $24 billion of similar-maturity debt.
Oil in New York dropped 0.8 percent to $96.20 a barrel. The six-day decline is the longest since July 2010. Gold’s decline narrowed this year’s gain to 1.2 percent.
To contact the reporters on this story: Stephen Kirkland in London at skirkland@bloomberg.net; Richard Frost in Hong Kong at rfrost4@bloomberg.net;
To contact the editor responsible for this story: Justin Carrigan at jcarrigan@bloomberg.net
