SF: Euro Drops as Stocks Snap Rally on Economy; Japan Futures Fall
Dec. 7 (Bloomberg) -- The euro weakened and stocks snapped a four-day rally as the Bundesbank cut its forecast for German growth and investors awaited data on U.S. jobs. Japanese stock futures fell after an earthquake struck the country.
The euro slid 0.3 percent to $1.2929 at 6:50 a.m. in New York. The Stoxx Europe 600 Index slipped 0.1 percent after rising 0.3 percent earlier. Standard & Poor’s 500 Index futures lost 0.1 percent. German power prices dropped to a record low. The cost of insuring against a corporate default in Europe rose from the lowest level in almost two months. Nikkei 225 Stock Average futures lost 0.6 percent.
The Bundesbank lowered its 2013 projection for German economic growth to 0.4 percent from the 1.6 percent predicted in June a day after the European Central Bank cut its forecasts. A U.S. government report today is expected to show the smallest gains in hiring since June as hurricane Sandy hit the labor market, according to a Bloomberg survey of economists. A 7.3- magnitude earthquake hit off northeastern Japan, the most powerful since last year’s record temblor, causing buildings in Tokyo to sway.
“The euro will continue to be sold,” said Kikuko Takeda, senior currency economist in London at Bank of Tokyo-Mitsubishi UFJ Ltd. “Europe is in recession and with no prospects of it getting better any time soon.”
The euro slipped against all but four of its 16 major counterparts. The yen appreciated against 14 of its 16 peers, advancing 0.1 percent versus the dollar and 0.5 percent against the euro.
Japan Quake
“The yen is being bought in a knee-jerk reaction to headlines on the earthquake,” said Marito Ueda, senior managing director in Tokyo at FX Prime Corp. “Given the difference in the magnitude of this earthquake to last year’s, the impact on the currency has been quite limited.”
The decline in U.S. futures indicated the S&P 500 will snap a two-day rally. Payrolls probably rose by 85,000 workers, the fewest since June, following a 171,000 increase in October, according to the median forecast of 90 economists surveyed by Bloomberg. The jobless rate may have held at 7.9 percent, the survey showed.
Three shares fell for every two that advanced in the Stoxx 600, which has rallied 0.9 percent this week. Deutsche Telekom AG, Germany’s biggest phone company, fell 3.2 percent after forecasting a lower dividend for the first time in three years. Berkeley Group Holdings Plc jumped 4 percent to a five-year high as the U.K.’s second-largest homebuilder by market value said first-half profit rose 45 percent.
Greek Debt
The so-called strip of all restructured Greek government bonds was bid at 32.22 cents on the euro, according to Piraeus Bank SA data, in the last day of trading, barring extensions, before holders must submit offers for a state buyback of the securities.
Spanish 10-year bonds fell for a third day, pushing the yield six basis points higher to 5.54 percent.
The Markit iTraxx Crossover Index of credit-default swaps on 50 mostly junk-rated European companies rose six basis points to 481, up from the lowest since Oct. 17.
German power for 2013, the benchmark European electricity contract, fell to a record low of 45.75 euros a megawatt-hour, according to broker data compiled by Bloomberg. Prospects for weakening demand in Europe’s biggest economy, coupled with record-low costs for carbon dioxide emission permits, are driving prices lower for a fourth consecutive month.
Hog Prices
Hog prices fell 0.7 percent to a one-month low on speculation that demand is easing after U.S. grocers filled Christmas meat orders. Oil dropped 0.3 percent to $85.99 a barrel. Copper erased gains after the Japan earthquake and lead, used mostly in car batteries, was down 0.7 percent. S&P GSCI gauge of 24 commodities slipped 0.2 percent.
The MSCI Emerging Markets Index slipped less than 0.1 percent. The Shanghai Composite Index jumped 1.6 percent before data on Dec. 9 that may show China’s industrial production, retail sales and fixed asset investment gained in November, according to economists’ estimates. Benchmark gauges in Russia, South Africa and Poland fell at least 0.6 percent. India’s Sensex index lost 0.3 percent.
--With assistance from Mika Otsuka and Amina Mobley in Tokyo Paul Armstrong, Claudia Carpenter, Paul Dobson, Andrew Rummer and Steve Voss in London. Editors: Stephen Kirkland, Stuart Wallace
To contact the reporters 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 swallace@bloomberg.net
