BLBG:Euro Slides as Stocks Pare Gains; Bunds, Natural Gas Rise
The euro weakened as European Central Bank policy makers prepared to meet tomorrow. The region’s stocks and U.S. equity-index futures erased gains, German bunds rose and natural gas climbed for a third day.
The 17-nation currency depreciated 0.5 percent to $1.3520 at 7:25 a.m. in New York, while the dollar gained against all of its 16 major counterparts. Germany’s 10-year yield fell one basis points to 1.64 percent. Russia’s 2027 ruble bonds snapped a seven-day slide on plans to open the market to foreign investors. The Stoxx Europe 600 Index slipped 0.2 percent and Standard & Poor’s 500 Index futures decreased less than 0.1 percent. Natural gas increased 1.6 percent.
ECB President Mario Draghi will head a meeting of policy makers meet tomorrow in Frankfurt as euro-area leaders gather for a summit in Brussels. The euro has retreated from a 14-month high against the dollar reached on Feb. 1 as concern deepened the region’s credit crisis may intensify. Stocks and U.S. equity-index futures gained earlier today as company earnings from ArcelorMittal to Walt Disney Co. beat estimates.
The ECB “is not only governing a region which is still struggling to achieve growth but also has to cope with a currency which is at risk of becoming too strong,” Adrian van Tiggelen, senior investment specialist in The Hague at ING Investment Management, which oversees more than $400 billion, said in a note today. “If this trend continues the ECB may be forced to lower interest rates even further and, or, make a less conservative use of the printing press.”
G7 Volatility
The euro slipped against most of its 16 major counterparts, losing 0.2 percent versus the yen. Australia’s dollar slid after retail sales unexpectedly dropped for a third month.
The JPMorgan G7 Volatility Index, calculated based on premiums on currency options, climbed as high as 9.6 percent, the most since July 25.
ArcelorMittal, the world’s biggest steelmaker, rose 1.8 percent. Hargreaves Lansdown Plc rallied 6.9 percent as earnings at the U.K.’s largest retail broker also topped estimates. ICAP Plc, the world’s biggest broker of transactions between banks, surged 7.1 percent.
Elan Corp. surged 8.8 percent in Dublin, the biggest gain since May, as Biogen Idec Inc. agreed to its stake in the multiple sclerosis drug Tysabri for $3.25 billion plus future royalties. Royal Imtech NV, the Dutch provider of infrastructure for stadiums whose shares sank 48 percent on Feb. 4 after predicting writedowns exceeding 100 million euros ($136 million), dropped 6.9 percent as the chief executive officer and chief financial officer of Imtech Deutschland left.
Disney Beats
The S&P 500 climbed 1 percent yesterday. Walt Disney Co., the largest entertainment company, advanced 3.4 percent in German trading. Zynga Inc. rallied 6.9 percent after the biggest maker of online social games reported fourth-quarter profit and sales that surpassed projections as it cut costs. Time Warner Inc. gained 2.1 percent after reporting adjusted earnings of $1.17 a share, compared with an estimate of $1.10.
Twenty-four companies in the S&P 500 are due to release results today. Some 74 percent of companies in the index have beaten analysts’ profit estimates since Jan. 8, according to data compiled by Bloomberg.
Japan’s Nikkei 225 Stock Average climbed 3.8 percent to the highest close since September 2008 as Toyota Motor Corp. raised its profit forecast.
Russian Bonds
The yield on Russia’s ruble bonds maturing in February 2027 declined eight basis points to 7.01 percent. Euroclear Bank SA said it will start direct settlement of ruble-denominated government debt tomorrow, opening the $100 billion so-called OFZ market to foreign investors.
The MSCI Emerging Markets Index slid 0.2 percent. Malaysia’s benchmark gauge dropped 1.2 percent as speculation mounted the government will dissolve parliament for elections. The Shanghai Composite Index added less than 0.1 percent, while Brazil’s Bovespa gauge slipped 0.2 percent and India’s Sensex lost 0.1 percent.
U.S. natural gas futures rose as forecasters including Commodity Weather Group LLC said below-normal temperatures will sweep into parts of the U.S. Midwest in the next 11 to 15 days. Lumber climbed to a one-month high in Chicago, rising the one- day limit of $10, on mounting speculation that new construction in China is boosting demand for imported wood.
Oil lost 0.7 percent to $96.02 a barrel in New York and lead dropped 1 percent as the S&P GSCI Index slid 0.3 percent. Platinum rose as much as 1.7 percent to $1,739.30 an ounce, the highest price since Sept. 22, 2001.
To contact the reporters on this story: Stephen Kirkland in London at skirkland@bloomberg.net; Glenys Sim in Singapore at gsim4@bloomberg.net
To contact the editor responsible for this story: Stuart Wallace at swallace6@bloomberg.net
