BLBG:Europe Stocks, Oil Slide On Debt Crisis Before EU Summit
Stocks fell for the first time in three days and commodities declined as European leaders prepared to meet in Brussels and data showed Japan’s exports grew slower than estimated. The yen strengthened, while German bonds snapped three days of losses as the government sold debt.
The MSCI All-Country World Index (MXWD) dropped 1 percent at 7:25 a.m. in New York. Futures on the Standard & Poor’s 500 Index slipped 0.7 percent. The yen appreciated against all 16 of its most-traded peers. The yield on the German 10-year bund declined five basis points to 1.42 percent. Cotton fell to a two-year low, raw sugar slumped to the lowest price since August 2010 and Brent oil retreated 1.1 percent.
European leaders are meeting today to discuss the region’s debt crisis. Deepening concern Greece will exit the euro has wiped about $4 trillion from equity markets worldwide this month. Japan’s exports in April trailed economists’ estimates, underscoring the risk that weakness in global demand may limit a rebound in the world’s third-biggest economy. Purchases of new homes probably rose in April, economists said before a Commerce Department report today.
“Conditions remain very fragile,” said Daphne Roth, the head of Asian-equity research at ABN Amro Private Banking in Singapore, which manages about $217 billion for clients globally. “There is a strong likelihood that Greece might exit the euro zone. Even if it stays, going forward there will be a lot of volatility,” she said in a Bloomberg Television interview.
LSE Tumbles
The Stoxx Europe 600 Index sank 1.6 percent, snapping a two-day, 2.5 percent rally. Rio Tinto Group and Vedanta Resources Plc led a retreat in mining companies. London Stock Exchange Group Plc (LSE) tumbled 6.6 percent, the most since 2009, after UniCredit SpA and Intesa Sanpaolo SpA sold a combined 11.5 percent stake. Burberry Group Plc slid 2.5 percent as the U.K.’s largest luxury-goods company said profitability may decline in the fiscal first half.
The decline in S&P 500 (SPX) futures indicated the U.S. gauge will drop for the first time in three days. Dell Inc. tumbled 13 percent in pre-market trading after the world’s third-largest maker of personal computers forecast fiscal second-quarter revenue that missed analysts’ estimates.
A report at 10 a.m. New York time may show U.S. new-home sales rose to 335,000 in April from 328,000 the prior month, according to a Bloomberg survey of economists.
The U.S. economy will probably tip back into recession next year if Congress doesn’t address an impending “fiscal cliff,” the Congressional Budget Office said yesterday.
The yen appreciated 0.7 percent against the dollar and 0.9 percent versus the euro.
Japan Easing
Japanese Finance Minister Jun Azumi called on the central bank to further ease policy moments before the Bank of Japan refrained from adding monetary stimulus.
“The BOJ must firmly pursue monetary easing to achieve its 1 percent inflation goal,” Azumi told lawmakers in parliament in Tokyo today. The central bank left its asset-purchase and credit-loan programs unchanged, as anticipated by all 14 economists surveyed by Bloomberg News.
The euro weakened 0.2 percent to $1.2659. The Dollar Index (DXY), which tracks the U.S. currency against those of six trading partners, rose 0.1 percent, climbing to a 20-month high. The pound declined 0.2 percent as a report showed U.K. retail sales fell the most in more than two years in April.
German Auction
Germany, the only country in the euro area with a stable outlook on its AAA rating, sold 4.56 billion euros ($5.8 billion) of two-year securities carrying a zero-percent coupon for the first time, Bundesbank data showed today. The notes were sold to yield 0.07 percent. The country offered a fixed interest payment of 0.25 percent when selling similar-maturity notes on April 18.
The yield on the 10-year U.S. Treasury note fell three basis points to 1.74 percent before the government sells $35 billion of five-year notes.
Oil declined 0.9 percent to $91 a barrel in New York and Brent crude fell for a second day in London after Iran agreed to grant access to United Nations nuclear inspectors ahead of an international summit in Baghdad today. The deal gives the International Atomic Energy Agency access to the nation’s Parchin military complex, IAEA head Yukiya Amano said yesterday.
The S&P GSCI gauge of 24 commodities slumped 1 percent to the lowest since Dec. 20. Cotton fell as much as 3.2 percent to 72.14 cents a pound, the lowest price since February 2010. Raw sugar dropped as much as 1.4 percent to 19.53 cents a pound, the lowest since August 2010.
The MSCI Emerging Markets Index declined 2 percent to a five-month low on a closing basis. Benchmark gauges in Taiwan, Thailand, Turkey, Poland and Hungary retreated more than 1.7 percent. Utilities helped lead Russia’s Micex Index 3 percent lower as President Vladimir Putin added companies to a list of strategic assets that precludes their privatization.
To contact the reporters on this story: Stephen Kirkland in London at skirkland@bloomberg.net; David Yong in Singapore at dyong@bloomberg.net;
To contact the editor responsible for this story: Stuart Wallace at swallace6@bloomberg.net
