BLBG:German Bonds Gain As Euro Falls; U.S. Stock Futures Rise
German bonds rose, with yields on 10- year bunds falling from a one-month high, and the euro weakened after Italy said the currency union is at risk. Stocks and U.S. index futures gained, while soybeans led commodities lower.
The German 10-year bund yield slid six basis points at 7:20 a.m. in New York, while the Spanish two-year rate lost 42 basis points. The euro depreciated 0.3 percent. The Stoxx Europe 600 Index added 0.2 percent and Standard & Poor’s 500 Index futures rose 0.2 percent. Knight Capital (KCG) Group Inc., the firm driven to the brink of bankruptcy by trading losses last week, tumbled 34 percent. Soybeans slid 2.2 percent and natural gas fell 1.8 percent on forecasts of a break in the U.S. heatwave.
Italian Prime Minister Mario Monti said the euro area is showing signs of “psychological dissolution,” according to an interview in Der Spiegel magazine. German Chancellor Angela Merkel’s government backed the European Central Bank’s bond- buying plan announced last week, her deputy spokesman Georg Streiter said today. Bank of Italy Governor Ignazio Visco suggested in a la Repubblica interview the ECB may be willing to counter further signs of a slowdown by cutting interest rates.
“It’s fair to say that many sources of volatility and risk remain over the next couple of months but if we can get to a stage where the ECB aggressively buys bonds then it will give Europe more time to try to find a growth miracle,” Jim Reid, a strategist at Deutsche Bank AG in London, wrote in a report.
The two-year German note yield was at minus 0.057 percent, below zero for the 22nd consecutive day. The similar-maturity Italian rate declined nine basis points, with the Portuguese yield sliding 75 basis points.
Default Risk
The cost of insuring against default on sovereign debt fell, with the Markit iTraxx SovX Western Europe Index of credit-default swaps on 15 governments decreasing two basis points to 247.
The euro dropped 0.4 percent versus the yen after rising 0.5 percent last week. Sweden’s krona depreciated against all 16 major peers.
More than two shares rose for every one that fell in the Stoxx 600. European stocks rose for a ninth week in the five days ended Aug. 3, extending the longest winning streak since January 2006. The Stoxx 600 climbed 13 percent over the period as policy makers eased repayment terms for Spanish banks and optimism grew central banks will announce stimulus measures.
Richemont Forecast
Cie. Financiere Richemont SA (CFR) rose 5.7 percent today, the most in more than two months, after the second-biggest luxury goods company said it expects fiscal first-half profit to rise 20 percent to 40 percent as currency shifts boost revenue. PostNL NV tumbled 4.7 percent after the Dutch postal company forecast full-year earnings at the lower end of a previously announced range.
The increase in S&P 500 futures indicated the U.S. gauge will extend gains after closing last week at a three-month high. The 10-year U.S. Treasury yield declined one basis point to 1.55 percent.
Knight Capital tumbled in early trading after the market maker agreed to a $400 million cash infusion through the sale of convertible preferred stock. Getco LLC, Blackstone Group LP, Stifel Nicolaus & Co. and TD Ameritrade Holding Corp. are investing, said two people with direct knowledge of the matter, who asked not to be named because the agreements aren’t public. Stephens Inc. and Jefferies Group Inc. are taking part and the securities will represent a 70 to 75 percent stake in the company, one of the people said.
The S&P GSCI gauge of 24 commodities declined 0.4 percent. Grains, oilseeds and natural gas dropped. Oil slipped 0.4 percent to $91.07 a barrel.
The MSCI Emerging Markets Index (MXEF) rose 1.2 percent, poised for its highest close since May 11. South Korea’s Kospi (KOSPI) index surged 2 percent and the Shanghai Composite (SHCOMP) rose 1 percent, taking its two-day rally to 2.1 percent, the best since May. China plans to let workers choose for as much as 30 percent of their wages to be paid in the shares of their publicly-traded employers. Benchmark gauges in Russia, India, Poland and the Czech Republic gained more than 1 percent.
To contact the reporters on this story: Stephen Kirkland in London at skirkland@bloomberg.net;
To contact the editor responsible for this story: Mark Gilbert at magilbert@bloomberg.net
