BLBG:European Stocks Decline As BP, UBS Slide; Corn Rises To Record
European stocks fell from a four- month high as worse-than-forecast results from UBS (UBSN) AG and BP Plc overshadowed speculation central banks will do more to support the economy. U.S. futures rose and corn climbed to a record.
The Stoxx Europe 600 Index slipped 0.3 percent at 11:45 a.m. in London. Standard & Poor’s 500 Index futures increased 0.2 percent. Corn in Chicago climbed 0.7 percent to $8.20 a bushel, heading for the biggest monthly gain in more than two decades. The euro rose 0.2 percent to $1.2283. The yield on the German bund fell three basis points, declining for a second day.
The Federal Reserve begins a two-day meeting in Washington today. European Central Bank officials will announce an interest-rate decision on Aug. 2 after ECB President Mario Draghi pledged last week to do whatever it takes to preserve the euro. Earnings from UBS and BP followed data today showing South Korea’s industrial production fell for the first time in three months and Taiwan’s gross domestic product unexpectedly shrank.
“There is a lot of hope that both the Fed and the European Central Bank take actions to support their economies,” said Pierre Mouton, a fund manager who helps oversee $6.5 billion at Notz Stucki & Cie. in Geneva. “No one expected earnings to be very good. After a couple of spectacular trading sessions, it’s an opportunity to lock in gains.”
The Stoxx 600’s drop brought this month’s gain to 5 percent. UBS, Switzerland’s largest bank, tumbled 4.9 percent after saying second-quarter net income fell 58 percent.
BP Sinks
BP retreated 3.9 percent, the most since November, as Europe’s second-biggest oil producer reported a second-quarter net loss of $1.4 billion, compared with a profit of $5.7 billion a year earlier. After one-time items and changes in inventories, earnings missed analyst estimates. Anheuser-Busch InBev NV (ABI), the world’s largest brewer, slid 4.2 percent as second-quarter beer volume unexpectedly declined.
The increase in S&P 500 futures indicated the benchmark gauge for U.S. stocks will extend this month’s 1.7 percent advance. Anadarko Petroleum Corp. (APC), the second-largest U.S. independent oil and natural-gas producer by market value, rose 0.7 percent in German trading after boosting its 2012 sales volume forecast and posting adjusted quarterly profit that exceeded analysts’ estimates.
More than 30 companies in the S&P 500 are releasing results today, including Pfizer Inc. and U.S. Steel Corp. Of the 303 companies to have reported so far, 72 percent beat analysts’ earnings estimates, according to data compiled by Bloomberg.
U.S. Economy
A report today may show confidence among U.S. consumers dropped in July for a fifth consecutive month. The Conference Board’s sentiment index fell to 61.5 from 62 in June, according to the median forecast of 71 economists in a Bloomberg survey.
The S&P/Case-Shiller index of property values in 20 cities dropped 1.4 percent in May from the same month in 2011, after decreasing 1.9 percent in the year ended April, a separate survey showed.
The 10-year U.S. Treasury yield was unchanged at 1.50 percent after it fell to a record 1.379 percent on July 25. Policy makers are looking for new monetary tools after the U.S. central bank lowered its benchmark interest rate to near zero in December 2008 and purchased $2.3 trillion of securities to spur the economy.
Fed Chairman Ben S. Bernanke will probably forgo announcing a third round of large-scale asset purchases this week, and is more likely to wait until September to unveil plans to buy $600 billion in housing and government debt, according to median estimates of economists in a Bloomberg News survey.
Fed Purchases
Eighty-eight percent of economists say the Federal Open Market Committee will refrain from starting new purchases this week. Forty-eight percent say the FOMC will announce the buying at its Sept. 12-13 meeting, according to the July 25-27 survey of 58 economists.
The 17-nation European currency dropped 3.2 percent against the dollar in July, on course for its third monthly decline in the past four. It slid 5 percent versus the yen in the period. The Australian dollar was little changed against the greenback today, headed for its second monthly gain. The yen appreciated versus all its major peers in July except the so-called Aussie.
The yield on the German bund dropped 23 basis points in July, with the nation’s debt returning 1.40 percent in the month through yesterday, according to indexes compiled by Bloomberg and the European Federation of Financial Analysts Societies. The Spanish 10-year yield was little changed at 6.62 percent today, down from a euro-era record 7.75 percent on July 25. The similar-maturity Italian rate slipped on basis point.
Corn Record
Corn rose to an all-time high for a second day as crop conditions deteriorated for an eighth week amid the worst U.S. drought in half a century. Futures rallied 29 percent this month, the most since June 1988.
Copper for three-month delivery advanced 0.9 percent to $7,614 a metric ton on the London Metal Exchange, trimming a monthly decline, as China increased its railway spending for the second time in a month.
The S&P GSCI gauge of 24 commodities rose 0.2 percent today. It has increased 7.8 percent in July, the biggest monthly gain since October.
Oil is headed for its biggest monthly gain since April. Crude for September delivery rose 0.2 percent to $90.11 a barrel in electronic trading on the New York Mercantile Exchange. The benchmark is up 6.1 percent this month.
Debt Insurance
The cost of insuring European corporate debt using credit- default swaps held at the lowest since April, on course for a second monthly decline.
The Markit iTraxx Crossover Index of credit-default swaps on 50 mostly junk-rated European companies fell one basis point to 625, the lowest since April 3. It has retreated 36 basis points this month. The Markit iTraxx SovX Western Europe Index tied to the debt of 15 governments climbed one basis point to 256, up from the lowest level since this series of the gauge started trading in March.
The MSCI Emerging Markets Index (MXEF) rose 1 percent, poised for its fourth consecutive gain and its highest close since May 11. The gauge has advanced 2.3 percent this month.
South Korea’s Kospi Index (KOSPI) jumped 2.1 percent and Taiwan’s Taiex Index added 1.6 percent. The Hang Seng China Enterprises Index (HSCEI) of mainland companies listed in Hong Kong increased 1.6 percent. The BUX Index (BUX) fell 1 percent in Budapest and benchmark gauges in Russia and Poland lost at least 0.2 percent.
To contact the reporter on this story: Andrew Rummer in London at arummer@bloomberg.net
To contact the editor responsible for this story: Chris Nagi at chrisnagi@bloomberg.net
