BLBG: European Bonds Rise on Factory Data; Ruble at Record Low
Italian and Portuguese government bonds rose as a report showing slowing factory output boosted the case for more central bank stimulus. Emerging-market stocks gained as investors speculated China will take steps to bolster growth, while Russia’s ruble weakened to a record.
Italy’s 10-year yield dropped two basis points to 2.42 percent at 9:14 a.m. in New York, while the yield on Portugal’s 10-year bonds fell five basis points to 3.17 percent. The MSCI Emerging Market Index advanced 0.4 percent, extending a third week of gains. Standard & Poor’s 500 Index futures were little changed, with U.S. markets closed for the Labor Day holiday. Russia’s currency slid 0.4 percent against the dollar.
Bets that European Central Bank policy makers will continue to support economies were boosted as euro-area manufacturing output expanded less than estimated in August, with activity slowing in Germany, Italy and Spain. An official Chinese gauge of production fell for the first time since February. European Union governments vowed at the weekend to impose more sanctions on Russia should the conflict with Ukraine worsen.
“The ECB will try to comfort investors that it’s really committed to anchoring inflation expectations,” said Jean Medecin, a member of the investment committee at Carmignac Gestion SA, which oversees about 50 billion euros ($66 billion) in assets. “There is a possibility for an additional rate cut. We don’t expect the ECB to commit to some form of large-scale quantitative easing this week.”
ECB Meeting
Five economists forecast the ECB will cut the refinancing rate by 10 basis points, or 0.10 percentage point, to 0.05 percent at its Sept. 4 meeting in Frankfurt, while the remaining 50 predict no change, according to Bloomberg surveys.
The Stoxx Europe 600 rose 0.1 percent following a 1.8 percent advance in August. Investors are sending the cost of protecting against declines in European stocks to a one-year low. Twelve of the 19 industry groups in the Stoxx 600 rose.
A euro-area Purchasing Managers’ Index fell to 50.7 last month from 51.8, London-based Markit Economics said today, less than the Aug. 21 preliminary reading of 50.8. A French gauge of manufacturing signaled the sharpest decline since May 2013, while a measure for Italy showed contraction after 13 months of expansion. Activity slowed in Spain, Holland and Germany.
The MSCI All-Country World Index was little changed after climbing 2 percent last month, the most since February. The MSCI AC Asia Pacific Index (MXAP) rose 0.1 percent, rebounding from its biggest monthly decline since January.
China Factories
The purchasing managers’ index from the China Federation of Logistics and Purchasing dropped to 51.1 for August. Economists surveyed by Bloomberg projected a decline to 51.2, from 51.7 in July. A level above 50 signals expansion.
The Shanghai Composite Index (SHCOMP) climbed 0.8 percent while the Hang Seng China Enterprises Index of mainland companies listed in Hong Kong lost less than 0.1 percent.
India’s S&P BSE Sensex (SENSEX) jumped 0.9 percent to a record. The economy grew 5.7 percent last quarter from a year earlier, the most in more than two years, a report showed Aug. 29.
The ruble weakened as much as 1 percent to 37.51 per dollar. The Micex Index (INDEXCF) rose 0.2 percent. Ukraine’s Eurobond due July 2017 fell, sending the yield 10 basis points higher to 12.8 percent, a 3 1/2-month high.
Pro-Russian rebels attacked two Ukrainian coast-guard vessels, just hours after EU governments agreed to impose new sanctions on Russia if the conflict worsens.
Dubai stocks gained for a second day, with Emaar Properties PJSC climbing 4.5 percent to the highest since close since January 2008. The Dubai-based developer plans to sell at least 15 percent of its mall unit in September and distribute 5.3 billion dirhams ($1.44 billion) of the proceeds as a dividend.
The yen weakened against all of its 16 major counterparts. The Japanese currency declined for a second day versus the dollar, depreciating 0.2 percent against the dollar and 0.3 percent per euro.
West Texas Intermediate crude for October delivery fell 0.3 percent to $95.71 a barrel in electronic trading on the New York Mercantile Exchange. Copper in London dropped 0.8 percent to $6,927 a metric ton.
To contact the reporters on this story: Emma O’Brien in Wellington at eobrien6@bloomberg.net; Andrew Reierson in London at areierson1@bloomberg.net
To contact the editors responsible for this story: Alexander Kwiatkowski at akwiatkowsk2@bloomberg.net Pratish Narayanan
