European stocks rose and bonds declined on signs of accelerating inflation in the 17-nation currency bloc. The euro climbed to a four-year high against the yen, while the pound advanced as the Bank of England said it would end incentives for mortgage lending.
The Stoxx Europe 600 Index gained 0.3 percent, approaching a five-year high, at 11:05 a.m. London time, and the yield on Spain’s five-year notes jumped six basis points to 2.66 percent. Japan’s Nikkei 225 rallied 1.8 percent and the yen weakened as much as 0.3 percent to 139.14 per euro. The MSCI Emerging Markets Index rose for a second day, with Dubai’s benchmark index set for its highest close in five years and Pakistan’s gauge reaching a record. The pound touched its strongest level since January while Indonesia’s rupiah sank to the lowest since March 2009. Gold rose 0.3 percent.
Inflation in Germany’s Saxony region accelerated for the first time in five months and Spanish consumer prices rose more than economists estimated, damping bets the European Central Bank will need to loosen monetary policy. Bank of England Governor Mark Carney said allowances under Britain’s Funding for Lending Scheme will only apply to business lending from 2014. U.S. stock and bond markets are shut for Thanksgiving.
“The more resilient German inflation is, the higher the hurdle is for more easing from the ECB,” said Eimear Daly, a currency-market analyst at Monex Europe Ltd. in London. “The inflation number from Saxony significantly boosted the euro.”
Rio Rally
The Stoxx 600 ended yesterday 0.2 percent from its highest close in five years. The index added 0.5 percent in November through yesterday, on pace for a third monthly gain. It advanced 16 percent this year through yesterday.
Thomas Cook Group Plc (TCG) rose 13 percent after the travel operator posted a 49 percent increase in full-year profit. Rio Tinto Group, the world’s second-biggest miner, added 2.9 percent after saying it will cost $3 billion less than projected to increase iron ore output capacity.
Kingfisher Plc lost 5.2 percent. Europe’s largest home-improvement retailer said a weak consumer economy in France weighed on its Castorama and Brico Depot chains.
A gauge of U.K. homebuilders fell 1.7 percent after the Bank of England’s announcement. Barratt Developments Plc lost 5.3 percent and Persimmon Plc also slipped 5.3 percent.
Economic confidence in the euro-area rose more than economists forecast in November, with an index of executive and consumer sentiment increasing to 98.5 from 97.7 in October, the European Commission in Brussels said today. Consumer prices rose more than economists estimated in Germany’s Brandenburg, Hesse, Bavaria and North Rhine Westphalia, separate data showed.
Inflation Expectations
Spain’s 10-year bond yield increased three basis points to 4.17 percent. The rate on similar-maturity German debt was little changed at 1.73 percent.
Germany’s 10-year break-even rate, a gauge of inflation expectations that measures the yield difference between bunds and index-linked securities, rose two basis points to 1.44 percentage points after closing at 1.42 percentage points yesterday, the least since May 2012.
The cost of insuring against losses on corporate bonds fell to the lowest since April 2010. The Markit iTraxx Europe Index of credit-default swaps on 125 investment-grade companies declined less than one basis point to 77 basis points.
Futures (SPX) on the Standard & Poor’s 500 Index expiring next month climbed 0.3 percent after the index rose 0.3 percent yesterday to 1,807.23, a record high. The gauge of U.S. equities has rallied 2.9 percent this month, bringing its advance for the year to 27 percent. It’s on pace for the biggest annual jump since 1997.
Asian Exports
Exporters led gains in Asian stocks after U.S. data yesterday showed jobless claims in the world’s largest economy fell while consumer sentiment exceeded estimates.
“Asia’s earnings growth does remain largely leveraged to the global economy,” Michael Kurtz, the Hong Kong-based head of global equity strategy at Nomura Holdings Inc., said in an e-mail. “Our economists expect the U.S. economy finally to accelerate to a more robust pace in 2014.”
The MSCI Emerging Markets Index increased 0.2 percent to 1,011.17. Dubai’s DFM General Index (DFMGI) jumped 1.6 percent after the emirate won the right to host the World Expo 2020.
The Karachi Stock Exchange KSE100 Index (KSE100) climbed 1.7 percent. Pakistan’s Prime Minister Nawaz Sharif moved to increase civilian control over the military in naming General Raheel Sharif, no relation to the prime minister and a U.K.- educated general seen as apolitical, to head the country’s army.
Indonesia’s rupiah weakened 1.1 percent versus the dollar, poised for its lowest closing level in 4 1/2 years.
Weak Yen
Japan’s Nikkei 225 rose the most in a week as Honda Motor Co., which gets more than 80 percent of its sales outside Japan, advanced 1.5 percent.
The yen weakened against all of its 16 major counterparts, falling most versus the Australian dollar. It was little changed at 102.19 per dollar, after touching 102.28, the weakest level in six months. The euro added 0.1 percent to $1.3593. Sterling jumped as much as 0.4 percent to $1.6347 and the yield on 10-year gilts added one basis point to 2.78 percent.
The Aussie snapped its longest losing streak versus the U.S. currency since May, rising 0.6 percent to 91.36 U.S. cents. Capital spending increased 3.6 percent from the second quarter, when it rose a downwardly revised 1.6 percent, the Bureau of Statistics said in Sydney today. That compares with the median forecast for a 1.2 percent drop in a Bloomberg News survey.
“The actual expenditure was a surprise,” said Janu Chan, an economist at St. George Bank Ltd. in Sydney. “It’s suggesting we’re not going to see that sharp decline in mining investment that some had feared.”
Gold Gains
Brazil’s central bank raised its benchmark interest rate to 10 percent from 9.5 percent yesterday, in line with estimates, as a weaker currency and widening budget deficit spur inflation. The real depreciated for a third day before the decision, dropping 1.5 percent against the dollar.
Gold for immediate delivery reached $1,241.79 an ounce in London trading, advancing for the first time in three days. The precious metal is still 6.2 percent lower for November, a third consecutive monthly decline. Platinum gained 0.5 percent to $1,359.25 an ounce, rebounding from the lowest price since July 8.
Aluminum touched $1,744, the lowest intraday price since July 2009. The metal is down 5.4 percent so far this month.
Crude oil, little changed in electronic trading in New York at $92.13 a barrel, was trading near the lowest in almost six months as stockpiles rose for a 10th week in the U.S., the biggest oil consumer.
To contact the reporters on this story: Rachel Evans in Hong Kong at revans43@bloomberg.net; Paul Dobson in London at pdobson2@bloomberg.net
To contact the editor responsible for this story: Stuart Wallace at swallace6@bloomberg.net
