BLBG:European Stocks Climb Before Payrolls as Bonds, Gold Fall
European stocks gained for a fifth day in the longest rally since April and bonds fell before the monthly U.S. payrolls report. Gold declined and the Australian dollar weakened.
The Stoxx Europe 600 Index advanced 0.4 percent to 304.36 at 9:45 a.m. in London, a nine-week high. Standard & Poor’s 500 Index futures rose 0.1 percent. Gold dropped for a sixth day , losing 1.7 percent to $1,288.25 an ounce. The yield on 10-year Treasury notes approached a two-year high. Australia’s dollar depreciated to the lowest in almost three years against the U.S. currency.
America’s jobless rate probably declined in July to match an April reading that was the lowest since 2008, economists said before today’s Labor Department report. Factory output from the U.S. to China and Europe expanded in July, reports yesterday showed. The Federal Reserve said the previous day it would maintain a monthly bond-buying program.
“There is a positive theme with gentle improvement in sentiment as a result of jobs, manufacturing data and consumer confidence,” Justin Urquhart Stewart, who helps oversee about $6.8 billion at Seven Investment Management in London, said in a telephone interview. “The market is taking a generally optimistic view to today’s non-farm payroll figures.’’
Three shares gained for every two that fell in the Stoxx 600, which has advanced 1.6 percent this week. Trading volumes were 15 percent above the 30-day average today.
Allianz SE and Axa SA, Europe’s largest insurers, rose more than 1.5 percent as earnings exceeded estimates. Royal Bank of Scotland Group Plc, Britain’s biggest publicly owned lender, slid 5 percent after reporting results and naming a new chief executive officer.
AIG Rallies
The S&P 500 has advanced 0.9 percent this week, on course for the biggest gain in three weeks. American International Group Inc. (AIG) rallied 4.5 percent in pre-market trading as the U.S. insurer posted operating profit that best estimates and declared its first dividend since accepting a government bailout in 2008.
Nine companies in the S&P 500 are due to report results today, including Chevron Corp. Of companies to have reported so far this period, 74 percent have topped earnings estimates and 56 percent exceeded sales forecasts, according to data compiled by Bloomberg.
Most emerging-market stocks rose as weaker currencies and signs of an improving global economy boosted exporters. Thailand’s benchmark index fell 1.5 percent to a three-week low on concern a planned anti-government demonstration and parliamentary debate on amnesty legislation will fuel political tension.
Oil Gains
The S&P GSCI (SPGSCI) gauge of 24 commodities was little changed, leaving its weekly gain at 1.6 percent after falling 2.1 percent last week. Gold’s six-day slump is the longest losing streak since May 17. West Texas Intermediate oil rose 0.1 percent to , to $108.02 a barrel, bringing this week’s advance to 3.1 percent, the most in a month.
“The bulls have regained control,” Matthew Sherwood, head of investment markets research in Sydney at Perpetual Investments, which manages about $25 billion, said in an e-mail. “Fears eased about the global economy and reassuring comments from central banks confirmed that the money glut will continue.”
Treasury 10-year note yields climbed two basis points to 2.73 percent, after jumping 13 basis points yesterday. The rate reached 2.75 percent on July 8, the highest since August 2011. Germany’s 10-year bund yield climbed four basis points to 1.71 percent and the yield on similar-maturity U.K. gilts increased seven basis points to 2.47 percent.
Italy’s 10-year bond yield fell one basis point to 4.35 percent after a ban on former Prime Minister Silvio Berlusconi holding public office was ordered to be reviewed even as he was convicted for tax fraud.
Default Risk
The cost of insuring against losses on corporate bonds declined today, with the Markit iTraxx Europe Index of credit-default swaps on 125 investment-grade companies decreasing 0.4 basis point to 96.3 basis points, the lowest since May 28. The gauge declined 5.4 basis points this week.
The dollar headed for weekly gains against all 16 of its major peers. The U.S. currency was little changed at $1.3221 per euro, set for a 0.5 percent advance from the end of last week. The dollar touched 99.70 yen, the strongest since July 25, before trading at 99.63. The Aussie dollar dropped to 88.89 U.S. cents, a level unseen since August 2010.
To contact the reporters on this story: Kyoungwha Kim in Singapore at kkim19@bloomberg.net Stephen Kirkland in London at skirkland@bloomberg.net
To contact the editor responsible for this story: Justin Carrigan at jcarrigan@bloomberg.net
