BLBG:Euro Slips With Spain, Italy Bonds as Commodities Advance
The euro weakened amid signs the discord has increased over how to stem the debt crisis while Spanish and Italian bonds fell after debt sales. Commodities gained before reports that will probably show U.S. consumer confidence and the housing market improved.
The euro declined 0.3 percent to $1.2898 at 6:05 a.m. in New York. Spain’s two-year note yield climbed seven basis points to 3.11 percent and the rate on similar-maturity Italian notes rose seven basis points to 2.32 percent. Ten-year Treasuries gained for a seventh day, the longest run since May 2011. Copper and oil both added 0.4 percent. The Stoxx Europe 600 Index slid 0.1 percent after increasing as much as 0.4 percent. Standard & Poor’s 500 Index futures were little changed.
Disagreement on the creation of a banking union, indecision on whether Spain needs a full rescue and difficulty in Greece on meeting bailout commitments are the latest evidence leaders are failing to draw closer to solve the debt crisis. Yields rose as Spain sold 4 billion euros ($5.2 billion) of three- and six- month bills, while demand dropped at the sale of Italy’s notes. Confidence among American consumers probably rebounded this month and a gauge of home prices rose the most in almost two years in July, economists said before reports today.
“We expect the euro zone to muddle through its tortuous crisis-management process for a very long time,” said Benjamin Yeo, Singapore-based head of investment strategy at Barclays Plc’s wealth-management, which handles about $285 billion. “The region’s headwinds will remain a strong headwind for the global economy.”
Greece Gap
Greece faces a financing gap that won’t be solved by budget measures being discussed, International Monetary Fund Managing Director Christine Lagarde said yesterday. Nobel Prize-winning economist Joseph Stiglitz said euro members will have to share debts and speed the implementation of a banking union to prevent a situation in which “the whole system falls apart.”
The euro slipped against 15 of its 16 major peers, falling as much as 0.5 percent to 100.16 yen, the weakest level since Sept. 13.
German 10-year bonds rose for a second day, pushing the yield to as low as 1.53 percent, the least since Sept. 11. The yield on 10-year Treasuries fell three basis points to 1.68 percent.
The cost of insuring European corporate debt rose for a second day, with the Markit iTraxx Crossover Index of credit- default swaps on 50 mostly junk-rated companies climbing 12 basis points to a three-week high of 544. The Markit iTraxx SovX Western Europe Index of 14 governments rose two basis points to 137 basis points.
Stimulus Measures
Three shares declined for every two that gained in the Stoxx 600. (SXXP) The index has rallied 17 percent from this year’s low on June 4 as European Central Bank policy makers agreed to implement an unlimited bond-buying program and the Federal Reserve unveiled a third round of asset purchases.
Daily Mail & General Trust Plc (DMGT), publisher of the Daily Mail newspaper, advanced 2.1 percent after saying full-year results will be in line with analyst estimates. Telekom Austria AG plunged 5.9 percent to an 11-year low after cutting its dividend. Continental AG sank 4 percent as Schaeffler AG sold a 10.4 percent stake in the tire producer. Standard Chartered Plc slipped 2.2 percent after a report that the bank’s largest shareholder talked to potential buyers for its holding.
U.S. futures were little changed after the S&P 500 declined for a third day yesterday. An index from S&P/Case-Shiller may show home prices in 20 U.S. cities rose 1.1 percent in July from the year-before period, the biggest gain since August 2010, according to a Bloomberg survey of economists. The Conference Board’s index of consumer confidence probably increased to 63.2 in September from 60.6 in August, a separate poll showed.
Caterpillar Falls
Caterpillar Inc. declined 2.4 percent in European trading as the world’s biggest maker of construction and mining equipment cut its forecast for 2015 earnings.
Nickel led commodity gains, rising 1.5 percent. The S&P GSCI index of raw materials increased 0.4 percent. Oil in New York rose to $92.32 a barrel. The U.S. is the biggest oil consumer and second-biggest user of copper. Lean hogs climbed as much as 0.7 percent to the highest since Aug. 3.
The MSCI Emerging Markets Index (MXEF) lost less than 0.1 percent. The Hang Seng China Enterprises Index of mainland companies traded in Hong Kong retreated 0.2 percent and the Shanghai Composite Index slid 0.1 percent. South Korea’s Kospi index lost 0.6 percent and Taiwan’s Taiex Index slipped 0.4 percent. Russia’s Micex Index (INDEXCF) retreated 0.3 percent. Benchmark gauges in India, Malaysia, Thailand, Indonesia and Poland advanced.
To contact the reporter on this story: Stephen Kirkland in London at skirkland@bloomberg.net; Jason Clenfield in Tokyo at jclenfield@bloomberg.net;
To contact the editor responsible for this story: Stuart Wallace at Swallace6@bloomberg.net
