BLBG: Euro Gains as Bonds Decline With Stocks on Inflation Data
The euro strengthened and European bonds fell after faster-than-estimated inflation hampered the case for expanding stimulus. Stocks fell along with Standard & Poor’s 500 Index futures, signaling the gauge will drop from a record high.
Europe’s shared currency jumped 0.7 percent to $1.3805 at 8:10 a.m. in New York. Germany’s 10-year bund yield rose five basis points to 1.61 percent. Sweden’s krona climbed after gross domestic product grew more than economists predicted. The Stoxx Europe 600 Index slid 0.3 percent and S&P 500 futures lost 0.1 percent. Wheat rose in its biggest monthly gain since July 2012.
Consumer prices grew an annual 0.8 percent, more than the 0.7 percent median forecast in a Bloomberg survey, the European Union’s statistics office said. The European Central Bank meets next week to set policy. In the U.S., a report will probably show the economy grew less than initially estimated in the fourth quarter, according to a Bloomberg survey of analysts.
“Relatively stable inflation is probably enough cover for the ECB to hold fire on policy,” said Paul Robson, a currency strategist at Royal Bank of Scotland Group Plc in London.
The euro gained against 13 of its 16 main peers, climbing 0.4 percent versus the yen. Sweden’s krona rose at least 0.8 percent against all of its 16 major peers, strengthening 0.9 percent per euro. Gross domestic product rose 1.7 percent from the third quarter, more than double the 0.6 percent seen in a Bloomberg survey of 14 analysts.
Yields on securities from France, the Netherlands and Belgium increased. The rate on 10-year Treasuries rose two basis points to 2.66 percent.
Pearson Slides
Trading in Stoxx 600-listed companies was 14 percent lower than the 30-day average, according to data compiled by Bloomberg. The gauge has climbed 4.2 percent this month, the most since September.
Pearson Plc fell 6.7 percent after the education company said it wouldn’t emerge from a difficult transition period until 2015 following an earnings plunge last year.
Erste Group Bank AG (EBS) lost 8.7 percent after Austria’s biggest lender cut its dividend following a decline in 2013 profit. The bank also said bad loan provisions will remain a drag on earnings.
Serco Group Plc, a U.K. services provider, jumped 6.8 percent after naming Aggreko Plc’s Rupert Soames chief executive officer. Aggreko, the provider of mobile-power generators, lost 3.6 percent.
Narrowing Loss
Andritz AG (ANDR), the Austrian maker of hydro-power turbines, rose 4.5 percent after reporting a quarterly loss that was smaller than expected. Old Mutual Plc climbed 4.9 percent after Africa’s biggest insurer said it is planning an initial public offering for its U.S. asset-management business. The company also said it made an acquisition in the U.K.
The S&P 500 gained 0.5 percent to a record yesterday after Federal Reserve Chair Janet Yellen said the central bank may change its strategy for reducing asset purchases should the economy weaken. The gauge has climbed 4 percent this month, the most since October.
The U.S. economy probably expanded 2.5 percent in the fourth quarter, slower than a preliminary estimate of 3.2 percent, economists projected. Consumer spending grew 2.9 percent in the last three months of 2013, lower than an earlier estimate of 3.3 percent, they said.
Another report from the National Association of Realtors at 10 a.m. New York time may show that contracts to buy previously owned homes rose in January for the first time in eight months. A gauge of pending house sales increased 1.8 percent last month, after dropping in December by the most since May 2010, economists in a Bloomberg survey predicted.
Ukraine Rebounds
The MSCI Emerging Markets Index rose 0.4 percent, advancing 3.3 percent in February, the first monthly gain since October. China’s yuan fell the most on record on speculation the central bank will widen the currency’s trading band.
Ukraine’s hryvnia rallied 12 percent to 9.55 per dollar, paring this month slide to 10 percent. The government’s $1 billion of bonds due in June rose to 94.89 cents on the dollar from 94.15 yesterday, lowering the yield to 29.52 percent.
The new government said it had enough reserves to pay all creditors and that it stands ready to meet all demands for aid while the central bank limited access to foreign-currency deposits.
Wheat gained 1.1 percent, poised for a 7.1 percent advance this month, the most since July 2012, on concern freezing conditions damaged crops in the U.S.
U.S. natural gas fell for a fifth day, dropping 0.8 percent. Gas is down 27 percent this week, poised for the biggest slump since December 1996.
To contact the reporter on this story: Stephen Kirkland in London at skirkland@bloomberg.net
To contact the editor responsible for this story: Stephen Kirkland at skirkland@bloomberg.net
