BLBG:European Stocks Fluctuate Amid Earnings As Euro, Wheat Decline
European stocks swung between gains and losses as companies including Royal Dutch Shell Plc and Unilever reported earnings, while the euro weakened amid concern Greece will exit the currency union. Grains slid as a U.S. drought was forecast to ease and oil dropped.
The Stoxx Europe 600 Index was within 0.1 percent of yesterday’s close at 8:16 a.m. in London while Standard & Poor’s 500 Index futures were also little changed. The MSCI Asia Pacific Index (MXAP) climbed 0.8 percent on speculation central banks will boost efforts to spur growth. The euro weakened against 12 of 16 major counterparts and traded near a two-year low against the dollar. Wheat and soybeans fell at least 0.4 percent, while oil slipped 0.7 percent in New York after U.S. stockpiles rose.
More than 60 members of the Stoxx Europe 600 gauge are scheduled to post earnings results today. Citigroup Inc. estimated there is a 90 percent chance Greece will exit the euro within 18 months, having previously given odds of 50 percent to 75 percent. Policy makers from the Federal Reserve, the European Central Bank and the Bank of England all meet next week, before the fifth anniversary of the financial crisis in August.
“Company-specific news is driving us, but the market is generally a bit more positive based on the QE3 expectation,” Matt Riordan, a portfolio manager who helps manage about $6.5 billion in Sydney at Paradice Investment Management, said, referring to a third round of quantitative easing by the Fed. “Europe is lurching and no closer to a solution.”
Shell, Canon
Shell, Europe’s biggest oil company, dropped 2.3 percent in London after reporting a bigger decline than expected in second- quarter earnings as crude prices dropped and maintenance work on fields held back production. Unilever, the world’s second- biggest consumer-goods maker, rallied 4 percent in Amsterdam. The company reported second-quarter sales that beat analysts’ estimates as growth of personal-care products in Asia helped offset declines in Europe.
MSCI’s Asian gauge snapped a four-day, 3.9 percent slump. Olympus Corp. jumped 9.6 percent in Tokyo after Terumo Corp., a Japanese medical device maker, proposed to merge with the camera maker, while Qantas Airways Ltd. surged 9.1 percent in Sydney as the Australian Financial Review said the nation’s biggest carrier was close to forming a long-haul alliance with Emirates Airline. Canon Inc. (7751), the world’s largest camera maker, tumbled 7.8 percent in Tokyo after cutting its profit forecast.
Data today is forecast to show U.S. orders for durable goods rose 0.3 percent in June from 1.3 percent in May, according to the median estimate in a Bloomberg News survey of economists. The National Association of Realtors may say its index of pending home purchases gained 0.3 percent in June, following a 5.9 percent jump in May, a separate poll showed.
Policy Meetings
Central banks, facing a global recovery that’s sputtering even after they delivered trillions of dollars of liquidity and near-zero interest rates, are having to consider fresh strategies to combat the global slowdown.
Fed Chairman Ben S. Bernanke’s Federal Open Market Committee meets July 31 and Aug. 1, a day before ECB President Mario Draghi’s Governing Council and BOE Governor Mervyn King’s Monetary Policy Committee. The institutions’ last meetings ended with the Fed extending its Operation Twist program, the ECB cutting its benchmark rate to a record-low 0.75 percent and the Bank of England restarting bond buying.
The euro slid 0.1 percent to $1.2152 after strengthening 0.8 percent yesterday. The New Zealand dollar added 0.4 percent to 79.22 U.S. cents as the nation’s central bank left its benchmark interest rate unchanged for an 11th straight policy meeting, saying the economy should grow “modestly.”
South Korea’s won rose 0.4 percent to 1,146.85 per dollar as the Bank of Korea said it expects economic growth to improve in the second half of the year. Gross domestic product increased 2.4 percent in the last quarter from a year earlier, the least in almost three years, data showed today.
Wheat, Oil
Wheat slid 0.4 percent to $8.99 a bushel in Chicago, while soybeans dropped 1.2 percent to $15.9675 a bushel.
The National Weather Service said flood advisories were in force in North Dakota and Minnesota, which were hit by drought. Rain may also fall across a much larger area including Iowa and Illinois, said Joel Widenor, of Commodity Weather Group LLC.
Oil dropped to $88.39 a barrel from $88.97, the first decline in three days, on concern that rising stockpiles signal faltering demand in the U.S., the world’s biggest crude consumer.
Crude inventories climbed by 2.7 million barrels last week, the first increase in a month, data from the Energy Department showed. Supplies were forecast to decline 1 million barrels, according to a Bloomberg News survey. Sales of new U.S. homes unexpectedly decreased in June from a two-year high, a Commerce Department report showed.
To contact the reporters on this story: Richard Frost in Hong Kong at rfrost4@bloomberg.net; Yoshiaki Nohara in Tokyo at ynohara1@bloomberg.net
To contact the editor responsible for this story: James Regan at jregan19@bloomberg.net
