BLBG:Europe Stocks Fall as Oil Rises on Syria; Lira Weakens
European stocks fell, oil rose to a two-year high and emerging-market currencies weakened on speculation there will be an American-led military strike against Syria. U.S. equity-index futures were little changed and Treasuries snapped a four-day advance.
The Stoxx Europe 600 Index slid 0.7 percent to 296.8 at 7:10 a.m. in New York. Standard & Poor’s 500 Index (SPX) futures swung between gains and losses after the gauge sank 1.6 percent yesterday. West Texas Intermediate oil climbed 0.9 percent to $109.95 a barrel, after rising as much as 3 percent. The Turkish lira and Indian rupee slumped to records. The dollar strengthened against 13 of its 16 major peers. The U.S. 10-year note yield increased two basis points to 2.73 percent after declining eight basis points yesterday.
The U.S. and its allies are moving closer to a military strike against Syria in response to an alleged chemical weapons attack near Damascus last week. President Barack Obama plans to release an intelligence assessment this week and U.K. Prime Minister David Cameron said Britain will put forward a draft resolution at the United Nations today authorizing action to protect civilians. Global funds have withdrawn about $44 billion from emerging-market stock and bond funds since the end of May through last week, according to EPFR Global, a Cambridge, Massachusetts-based data provider.
“Syria’s taking attention away from what’s been generally better news out of the U.S. in terms of stronger growth,” Sean Fenton, a Sydney-based fund manager who helps oversee about $1 billion at Tribeca Investment Partners, said in a Bloomberg Television interview. “It’s probably even more concerning what’s happening within Asia in terms of capital flight.”
Broader Conflict
Stocks declined and crude rallied amid speculation that any strike against Syria may spread to other parts of the Middle East and threaten exports from a region that produces 35 percent of the world’s oil. Saudi Arabia, the largest supplier in the Organization of Petroleum Exporting Countries, has backed rebels opposed to Syrian President Bashar al-Assad. Assad’s allies include Iran, the group’s sixth-biggest producer.
“The fear here is that a strike on Syria will lead to a broader regional conflict vis-à -vis al-Assad’s puppet-master,” Stephen Schork, president of the Schork Group Inc., an energy advisory company in Villanova, Pennsylvania, said in a report today.
Four shares fell for every one that gained in the Stoxx 600, as the gauge retreated for a third day. The volume of shares changing hands in Stoxx 600 companies was 18 percent greater than the 30-day average, according to data compiled by Bloomberg.
Airlines Slide
Air France-KLM Group (AF) and Deutsche Lufthansa AG, Europe’s largest airlines, lost more than 4 percent as oil climbed. Polymetal International Plc slid 6.8 percent as the Russian gold and silver miner part-owned by billionaire Alexander Nesis posted a first-half loss.
Dubai’s stock market, which has risen more than any benchmark in the 40 largest equity markets in 2013 even as violence in the region spread, slipped 1.3 percent, extending yesterday’s 7 percent slump that was the most since November 2009. Israel’s benchmark TA-25 Index dropped 0.9 percent, its seven straight decline, to the lowest level since September 2012.
S&P 500 futures were little changed after the gauge dropped the most in two months yesterday. Data from the National Association of Realtors at 10 a.m. New York time may show the number of Americans signing contracts to buy previously owned homes was little changed in July. The index of pending home sales was unchanged after a 0.4 percent drop the previous month, according to the median forecast in a Bloomberg survey of 37 economists.
Oil, Gold
WTI advanced to $112.24, the highest since May 2011, and Brent oil climbed 0.8 percent to $115.32, after reaching $117.34. Brent may rise to as high as $150 a barrel if Middle East conflict disrupts supply, according to Societe Generale SA.
The S&P GSCI (SPGSCI) gauge of 24 commodities jumped 0.5 percent to the highest since Feb. 20. Gold climbed 0.6 percent to $1,423.04 an ounce and silver advanced 1.1 percent to $24.7420 an ounce. Copper fell 0.7 percent to $7,264.75 a metric ton.
Turkey’s lira dropped as much as 1.6 percent to 2.0693 per dollar, before paring declines and trading 1.2 percent lower at 2.0617. The rupee slumped 3.1 percent after losing as much as 3.9 percent to 68.7550 versus the dollar. The Thai baht and Philippine peso fell at least 0.3 percent.
The dollar strengthened 0.4 percent against the yen and 0.3 percent versus the euro. The Bloomberg U.S. Dollar Index, which tracks the currency against 10 major peers, rose 0.3 percent.
The U.S. five-year note yield climbed from the lowest level in more than a week before the nation sells $35 billion of the securities today, the second of three auctions of coupon-bearing debt this week.
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
