European government bonds rose, pushing French yields to a record low, and the euro weakened as slowing inflation boosted the prospect of more central bank stimulus. Futures on the Standard & Poor’s 500 Index (SPX) were little changed after the gauge closed at an all-time high yesterday. French 10-year bond yields fell as low as 1.70 percent as of 7:25 a.m. New York time, while the euro weakened against all but two of its 16 major peers. The MSCI All-Country World Index of shares added 0.2 percent, extending the highest level since June 2008. European stocks headed for an 11th month of gains, and corn for July delivery advanced 0.8 percent to $6.65 a bushel in Chicago. Treasuries rose. Euro-area inflation slowed more than economists forecast in April, data showed today, and most economists in a Bloomberg News survey predict the European Central Bank will cut interest rates this week. The Federal Reserve will also consider renewing its commitment to bond buying at a two-day meeting that starts today. Stocks were boosted by earnings from UBS AG to BP Plc (BP/) that surpassed analyst estimates. “The chances of an ECB cut this week have been revised upwards so the market has been chasing fixed-income, particularly in Europe,� said Francesco Garzarelli, the London- based co-head of macro and markets research at Goldman Sachs Group Inc., in an interview on Bloomberg Television’s “The Pulse� with Francine Lacqua and Guy Johnson. For the Fed, “the big question mark, or the elephant in the room, is whether they taper these purchases� of bonds, he said. Rate Cut The Frankfurt-based ECB will lower its benchmark rate to a record 0.5 percent when central bankers meet in Bratislava on May 2, according to the median estimate of analysts in a Bloomberg survey. Reports from the European Union’s statistics office in Luxembourg today showed the annual inflation rate in the euro area fell to 1.2 percent in April, the lowest since February 2010, and the March jobless rate advanced to 12.1 percent, the highest since the data series began in 1995. Germany’s 10-year bund yield fell to a nine-month low of 1.18 percent and the rate on similar-maturity U.S. Treasury notes dropped two basis points to 1.65 percent. Spain’s 10-year securities headed for an eighth monthly gain, the longest streak in eight years, as yields declined to 4.11 percent, the least since October 2010. Italy’s two-year note yield fell as low as 1.10 percent, the least on record. The euro weakened 0.2 percent to $1.3075 and tumbled 0.4 percent to 127.55 yen. Won Intervention The South Korean won advanced 0.5 percent to 1,101.28 per dollar, the strongest closing level since March 13. The currency appreciated on speculation South Korean exporters were converting proceeds from overseas sales as tension with North Korea eased. Finance Minister Hyun Oh Seok said today that intervention in the foreign-exchange market would have more disadvantages than advantages, Yonhap news agency reported. Futures on the S&P 500 slipped 0.1 percent after the benchmark gauge closed at an all-time high of 1,593.61. A Conference Board report at 10 a.m. in New York may show U.S. consumer confidence increased this month, according to a Bloomberg survey of economists. The S&P/Case-Shiller index of property values in 20 American cities climbed 9 percent in February from the same month in 2012, economists predict. UBS, BP The Stoxx Europe 600 Index headed for an 11th straight month of gains, the longest winning streak since 1997. UBS, Switzerland’s biggest bank, rallied 7.1 percent as first-quarter earnings beat analyst estimates on higher revenues at the investment bank and in wealth management. BP rose 3.5 percent as Europe’s second-largest oil company reported profit that exceeded projections because of an improved performance at its fuel-trading business. Deutsche Bank AG surged 7.3 percent, on plans to raise as much as 4.8 billion euros ($6.3 billion) in capital. Anheuser-Busch InBev NV (ABI), the world’s biggest brewer, sank 3.3 percent after posting first-quarter profit that missed analysts’ forecasts on weaker-than-anticipated beer sales in Brazil and the U.S. The MSCI Emerging Markets Index rose to a one-month high, led by technology companies, as investors speculated global monetary stimulus will boost demand for riskier assets. “There’s plenty of liquidity around the world, and so one would presume we will continue to see the rally for the next six to 12 months,� said Khiem Do, the Hong Kong-based head of Asian multi-asset strategy at Baring Asset Management Ltd., which oversees about $51 billion. “In the short term, some markets like Japan and the U.S. have been overbought and could consolidate from day to day.� Wet Weather Chinese markets were closed today for holidays, while Japan’s were shut yesterday. There are holidays tomorrow in most of Asia’s emerging markets. Corn for July delivery advanced for a second day after a government report showed cold, wet weather curbed planting in the U.S., the world’s biggest exporter. Silver dropped 0.5 percent to $24.43 an ounce and was 14 percent lower for the month, the biggest loss since December 2011. Gold was little changed at $1,474.57 an ounce, headed for a 7.8 percent monthly decline, as assets in bullion-backed exchange-traded products shrank by the most on record. West Texas Intermediate crude slipped 0.2 percent to $94.27 a barrel and was down 3 percent this month. U.S. inventories probably increased to the highest level in more than 22 years, a Bloomberg survey showed. Saudi Arabian Oil Minister Ali al-Naimi is scheduled to speak at the Center for Strategic & International Studies today in Washington. To contact the reporters on this story: Richard Frost in Hong Kong at rfrost4@bloomberg.net; Paul Dobson in London at pdobson2@bloomberg.net To contact the editors responsible for this story: James Regan at jregan19@bloomberg.net; Justin Carrigan at jcarrigan@bloomberg.net

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