BLBG:Europe Futures, Copper Fall; China Shares Tumble as Rupee Gains
European equity futures declined, signaling the benchmark index may drop from a 15-month high, before leaders meet this week to discuss the region’s debt crisis. Chinese shares slumped, along with copper and wheat.
Euro Stoxx 50 Index futures lost 0.5 percent at 7:29 a.m. in London, while those on the Standard & Poor’s 500 Index slipped 0.3 percent. China’s Shanghai Composite Index (SHCOMP) sank 1.5 percent on concern a slowdown in the world’s second-largest economy is deepening amid escalating tensions with Japan. Copper retreated after stockpiles climbed in Asia, while wheat fell 1.2 percent. India’s rupee rallied after the government opened its retail sector.
Spanish Prime Minister Mariano Rajoy travels to Rome for talks with Italian Prime Minister Mario Monti this week. Attention is also shifting to what Chinese policy makers are doing to bolster growth after the U.S. Federal Reserve and European Central Bank announced plans to buy bonds. A dispute with Japan over islands claimed by both nations led to protests in Chinese cities, while at least 13 banks and brokerages cut their 2012 economic growth forecasts for China this month.
“The plans are laid in Europe, but the actual implementation will be the challenge,” said Lee Wai Tuck, a currency strategist at Forecast Pte in Singapore. “Geopolitical tensions between China and Japan will not be good for the economy and trade.”
Asian Shares
The MSCI Asia Pacific Excluding Japan index added 0.2 percent to its highest level since May 2 as material and energy producers climbed. Japanese and Malaysian markets are closed today for holidays. The Hang Seng China Enterprises Index of Chinese companies traded in Hong Kong and South Korea’s Kospi index both dropped 0.3 percent.
The official Xinhua News Agency said China needs to be more cautious with its monetary policies as quantitative easing in the U.S. will create more pressure to control inflation. Xinhua cited Lu Zhengwei, chief economist at Industrial Bank Co.
Japanese Prime Minister Yoshihiko Noda said he’ll demand China ensures the safety of Japanese citizens amid protests in a dozen cities including Beijing. Tensions worsened after Noda’s government said last week it would purchase the disputed islands from their private Japanese owner.
The MSCI All-Country World Index jumped 3 percent last week after the Fed said on Sept. 13 it will conduct open-ended purchases of $40 billion of mortgage debt a month and pledged to keep federal fund rates near zero “at least through mid-2015.” ECB President Mario Draghi said on Sept. 6 that policy makers agreed an unlimited bond-purchase program.
Europe Meetings
A meeting of European Union finance ministers last week in the Cypriot capital of Nicosia deadlocked over the timetable for a more unified European Union banking sector. The ministers also disagreed over the terms of bailout requests and the role of the European Central Bank.
Spain’s Rajoy will meet Italy’s Monti on Sept. 21. The following day, German Chancellor Angela Merkel will hold talks with French President Francois Hollande at a commemoration in Ludwigsburg, Germany.
Copper for delivery in three months dropped 0.7 percent to $8,323.50 a metric ton on the London Metal Exchange. Inventories at LME warehouses in Asia gained 3.9 percent to 93,050 tons in the week to Sept. 14, rising for the first time in five weeks. Zinc sank 1.4 percent and tin lost 1.7 percent.
Platinum was little changed after climbing for 11 days amid disruptions to supply in South Africa, the largest producer. The metal traded at $1,708.12 an ounce after reaching $1,715.24 on Sept. 14, the highest since Feb. 29.
Indian Reforms
Wheat dropped 1.2 percent to $9.13 a bushel on the Chicago Board of Trade amid forecasts for wetter weather in areas sown with winter wheat in the U.S. Corn and soybeans also declined.
The rupee strengthened 0.8 percent to 53.9763 per dollar, following a 2 percent advance on Sept. 14, according to data compiled by Bloomberg. Indian Prime Minister Manmohan Singh approved on Sept. 14 plans to open the nation’s retail and aviation industries to overseas investors.
The Dollar Index (DXY), which IntercontinentalExchange Inc. (ICE) uses to track the greenback against the currencies of six U.S. trading partners, was little changed at 78.827 before Federal Reserve Bank of New York President William C. Dudley and Chicago Fed chief Charles Evans speak tomorrow.
Policy makers must control volatile capital flows as easing measures taken in the U.S. and Europe have a “negative spillover” into developing countries, Bank of Korea Governor Kim Choong Soo said on Sept. 14. Liu Mingkang, former chairman of the China Banking Regulatory Commission, called the Fed’s move “irresponsible” in comments to Bloomberg News at a conference in Beijing on Sept. 15.
To contact the reporters on this story: Richard Frost in Hong Kong at rfrost4@bloomberg.net; Kristine Aquino in Singapore at kaquino1@bloomberg.net
To contact the editor responsible for this story: Rocky Swift at rswift5@bloomberg.net
