BLBG:Euro Weakens, European Stocks Decline as Greek Debt Talks Falter
The euro weakened and European stocks fell for the first time this week after the region’s finance ministers failed to agree on a debt-reduction package for Greece. The yen slumped, while copper led metals lower.
The euro declined 0.5 percent to $1.2758 as of 8:14 a.m. in London. The Stoxx Europe 600 Index (SXXP) dropped 0.2 percent, while futures on the Standard & Poor’s 500 Index slid 0.3 percent. The yen retreated to 82 per dollar for the first time since April after Japan’s exports fell more than expected. The greenback rose against all 16 of its major peers. Copper lost 0.9 percent.
More than 11 hours of talks broke up today in Brussels with praise for Greece’s economic overhaul and a declaration that an accord on the financing package will wait at least until a ministerial meeting on Nov. 26. Japanese shipments dropped for a fifth month, pushing the world’s third-largest economy closer to recession. New U.S. home construction climbed to a four-year high in October, exceeding all estimates in a Bloomberg survey.
“It’s been a bumpy road when it comes to the Eurozone,” Chu Moon Sung, a Seoul-based fund manager at Shinhan BNP Paribas Asset Management Co., which oversees about $31 billion, said by phone today. “This should create uncertainty for a while and temper risk appetite a bit, though it won’t mean a downward trend sets in.”
About five stocks rose for every four that fell on the MSCI Asia Pacific Index (MXAP), which added 0.2 percent. The Nikkei 225 Stock Average advanced 0.9 percent to close at its highest level since May as the weaker yen boosted the earnings outlook for exporters. Hong Kong’s Hang Seng Index climbed 1.4 percent. South Korea’s Kospi index dropped 0.3 percent.
Greek Talks
The S&P 500 closed little changed yesterday as the increase in housing starts tempered a 12 percent tumble in Hewlett- Packard Co. shares after the company announced a charge of $8.8 billion linked to its Autonomy Corp. business. U.S. markets will be closed for the Thanksgiving holiday tomorrow.
European finance chiefs failed to agree on a package for Greece after battling with the International Monetary Fund over how to nurse the recession-wracked country back to fiscal health. With creditors led by Germany refusing to put up fresh money or offer debt relief, the ministers were unable to gather enough funds from other sources to help reduce Greece’s debt burden, set to hit 190 percent of gross domestic product in 2014.
“We have a series of options on the table on how to close the financing gap,” German Finance Minister Wolfgang Schaeuble told reporters. “We discussed the issue very intensively, but since the questions are so complicated we didn’t come to a final agreement.”
Dollar Strength
The euro declined against 12 of its 16 major counterparts. India’s rupee declined as much as 0.5 percent to 55.3750 per dollar, a 10-week low. The yen weakened 0.5 percent to 82.06 per dollar, its lowest level since April 6. The Dollar Index rose 0.3 percent.
Japan’s exports fell 6.5 percent in October from a year earlier, leaving a trade deficit of 549 billion yen ($6.7 billion), the Finance Ministry said today. Economists estimated a 4.9 percent decline in exports. Imports dropped 1.6 percent.
The Japanese currency weakened 2.5 percent in the past week, the worst performer tracked by Bloomberg Correlation- Weighted Currency indexes, amid speculation national elections next month will hand power to an opposition party in favor of more stimulus.
Copper for delivery in three months slipped 0.9 percent to $7,706 a metric ton. Nickel decreased 1.2 percent and tin dropped 1.4 percent.
Mideast Cease-Fire
Oil for January delivery gained 0.2 percent to $86.89 in New York, paring an earlier advance of 0.8 percent. The American Petroleum Institute said crude inventories slid 1.9 million barrels last week.
Secretary of State Hillary Clinton will shuttle today through Jerusalem, the West Bank and Cairo in a bid to salvage a proposed cease-fire intended to halt a weeklong torrent of Palestinian rockets and Israel air strikes.
In the U.S., housing starts rose 3.6 percent to an 894,000 annual rate, the fastest since July 2008, Commerce Department figures showed. The median forecast of 82 economists called for an 840,000 pace. Permits for the construction of single-family homes also advanced to the highest in four years.
Federal Reserve Chairman Ben S. Bernanke said yesterday an agreement on ways to reduce long-term federal budget deficits would remove an impediment to growth, while failure to avoid the so-called fiscal cliff would pose a “substantial threat” to the recovery. The S&P 500 has fallen as much as 5.3 percent since the Nov. 6 election set up a budget showdown between President Barack Obama and the Republican-controlled House.
The Thomson Reuters/University of Michigan consumer sentiment index probably rose to 84.5 in November from 82.6 in October, according to a Bloomberg survey of economists before the report is released at 9:55 a.m. New York-time. The group issued a preliminary number of 84.9 earlier this month. The index hasn’t been higher than 84 since July 2007.
To contact the reporters on this story: Richard Frost in Hong Kong at rfrost4@bloomberg.net; Saeromi Shin in Seoul at sshin15@bloomberg.net
To contact the editor responsible for this story: Nick Gentle at ngentle2@bloomberg.net
