BLBG:Stocks, Euro Advance Before ECB Meeting; Gold Climbs
Stocks rose and the euro approached a two-month high while Spanish and Italian bonds extended a rally that drove yields down every day this week as investors awaited details of the European Central Bank’s plan to ease the debt crisis. Gold climbed to a five-month high.
The MSCI All-Country World Index added 0.3 percent at 9:25 a.m. in London. Standard & Poor’s 500 Index futures advanced 0.7 percent. The euro strengthened 0.2 percent to $1.2626, while Sweden’s krona weakened against its 16 major counterparts after its central bank cut rates. Italy’s 10-year yields fell 10 basis points to 5.41 percent and the rate on similar-maturity Spanish debt lost 16 basis points to 6.25 percent. The cost of insuring European corporate debt using credit-default swaps slid for a fifth day. Gold rose 0.8 percent to $1,706.95 an ounce.
ECB President Mario Draghi favors unlimited purchases of government debt that will be sterilized to assuage concerns about printing money, two central bank officials briefed on the plan said before Draghi speaks at a press briefing today. Growth in U.S. service industries probably eased in August and companies took on the fewest workers in three months, economists said before reports today that precede payrolls data tomorrow.
“Investors are waiting for the outcome of the ECB meeting,” said Piet Lammens, head of research at KBC Bank NV in Brussels. “The markets are hoping there will be a bond plan and that Draghi has a large majority for this. Market sentiment is good because of the hopes that the ECB will intervene at the short-end.”
Lonmin Accord
The Stoxx Europe 600 Index (SXXP) advanced 0.7 percent as all 19 industry groups gained. Lonmin Plc, the platinum producer whose main mine has been shut for a month because of a violent strike that led to 44 deaths, surged 7.3 percent after it signed an accord to open wage talks with three unions. Luxottica SpA (LUX), the world’s biggest maker of eyeglasses, sank 7.7 percent as Chairman Leonardo Del Vecchio sold a stake.
The gain in S&P 500 futures indicated the gauge will rise for the first day this week. The Institute for Supply Management’s non-manufacturing index, which covers about 90 percent of the economy, is projected at 52.5 last month following July’s 52.6, according to the median forecast of 76 economists in a Bloomberg survey. A reading greater than 50 signals expansion.
The euro advanced against most of its main counterparts. Sweden’s krona weakened 0.4 percent against the euro after the Riksbank cut interest rates by 0.25 percentage points to 1.25 percent.
German Bunds
German 10-year bunds fell for a fifth day, with the yield rising four basis points to 1.52 percent. Treasury 10-year yields rose two basis points to 1.61 percent.
The Markit iTraxx Crossover Index of credit-default swaps tied to 50 mostly junk-rated companies fell seven basis points to 551, the lowest since March 19. The Markit iTraxx SovX Western Europe Index of contracts on 15 governments dropped four basis points to 216, the lowest since March.
The Standard & Poor’s GSCI gauge of 24 commodities advanced 0.6 percent, with silver up 2.1 percent and New York oil gaining 1 percent to $96.28 a barrel. Gold will be at $1,840 an ounce by the end of the year, Jeffrey Currie, head of commodities research at Goldman Sachs Group Inc., said in a Bloomberg Television interview. The bank is “modestly bullish” on commodities, he said.
The MSCI Emerging Markets Index (MXEF) added 0.3 percent. The Shanghai Composite Index (SHCOMP) added 0.7 percent as railway companies rallied after a government agency approved subway plans for 18 cities. Russia’s Micex jumped 0.8 percent and India’s Sensex climbed 0.4 percent. Benchmark gauges in South Africa, Poland, Thailand and the Czech Republic gained at least 0.6 percent. Malaysia’s equity index sank 1.5 percent amid concern loan growth will slow and as palm oil prices declined.
To contact the reporter 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: Stuart Wallace at Swallace6@bloomberg.net
