BLBG: European Shares Rise With Italian Bonds as Euro Declines
European stocks rose for a second day, Italian bonds gained and the euro weakened as signs of slower economic growth bolstered the case for more stimulus. Oil rebounded while the ruble erased earlier losses.
The Stoxx Europe 600 Index advanced 0.4 percent by 6:46 a.m. in New York, while Standard & Poor’s 500 Index futures were little changed. The euro slid the lowest against the dollar in more than two years. Russia’s currency rebounded amid speculation the central bank intervened to stem losses. Gains in Italian bonds sent the 10 year yield below 2 percent for the first time. West Texas Intermediate added 0.7 percent tp $67.33 a barrel and gold rose 0.4 percent.
Services and manufacturing in the euro area grew less than initially estimated, Markit Economics said today before European Central Bank President Mario Draghi leads this year’s last policy meeting tomorrow. Federal Reserve Vice Chairman Stanley Fischer said he was getting closer to replacing a vow to hold rates low for a “considerable time” and guidance should be tied to economic data.
“Money is flowing back into European stocks, markets are near their highs, bond yields are going down -- everything is back on track now,” said Carsten Hilck, who oversees $4 billion as a senior fund manager at Union Investment Privatfonds GmbH in Frankfurt. “Everyone wants Draghi to leave the option for QE out in the open. Even if he doesn’t make a decisive comment, that will be enough to keep markets happy. He just has to show the gun, but not yet use it.”
QE Outlook
UBS Group AG said it now expects large-scale quantitative easing in March as inflation will remain low given the oil price decline, economists led by Reinhard Cluse wrote in a report. U.S. reports today will probably show employers added fewer jobs in November while the service industries expanded at a faster pace, according to Bloomberg surveys of economists.
The euro slid 0.4 percent to $1.2333, its weakest level since Aug. 20, 2012. The dollar climbed to a seven-year high of 119.44 yen and touched 83.89 U.S. cents per Aussie dollar, a level last seen in 2010.
Italian 10-year bonds were higher for a fifth day, pushing the yield two basis point lower to 1.99 percent. Spain’s 10-year rate dropped three basis points to 1.82 percent.
Ten-year gilts were little changed, yielding 1.97 percent, before U.K. Chancellor of the Exchequer George Osborne outlines his tax and spending plans today. They tumbled yesterday, pushing the yield up by seven basis points, the most in six weeks.
Telenor Climbs
Two shares rose for every one that declined in the Stoxx 600. Telenor ASA advanced 1.5 percent and TeliaSonera AB gained 1.1 percent after the Nordic phone carriers agreed to combine their Danish businesses into a joint venture. Denmark’s TDC A/S climbed 4.9 percent.
Ladbrokes Plc rose 1.3 percent after the U.K. bookmaker said its chief executive officer will step down in 2015. Salzgitter AG climbed 4.5 percent after the steelmaker said insurance policies will cover most losses linked to Russia’s discontinuation of its Black Sea pipeline project.
German retailer Metro AG fell 5.5 percent after JPMorgan Chase & Co. lowered its rating on the stock, and Adidas AG slid 3.3 percent following a Barclays Plc downgrade.
Futures on the S&P 500 expiring this month were little changed after the index halted a two-day loss. It closed 0.3 percent away from a record.
Emerging Markets
The MSCI Emerging Markets Index slipped 0.2 percent. The Hang Seng China Enterprises Index of mainland shares traded in Hong Kong lost 0.6 percent, while the Shanghai Composite Index increased 0.6 percent.
The ruble strengthened 0.8 percent to 53.3725 per dollar after earlier weakening to a record 54.9090. A report today showed Russian Russia’s services activity slumped to a 5 1/2-year low in November.
“It looks like the central bank is back on the market,” Evgeny Shilenkov, head of trading at Veles Capital LLC in Moscow, said by phone.
The currency has depreciated 38 percent this year as sanctions over Ukraine created a dollar shortage and a slump in oil helped send the country toward its first recession since 2009. The Economy Ministry yesterday estimated gross domestic product will shrink 0.8 percent next year, while a former central banker spoke of “some panic” in the financial system.
Oil Rebounds
WTI and Brent crude rose for the second time in three days amid speculation that losses stemming from OPEC’s decision not to cut production have been excessive. An Energy Information Administration report today may show U.S. inventories expanded by 1.75 million barrels, the median estimate in a Bloomberg News survey of eight analysts shows.
WTI for January delivery rose as much as $1.09 to $67.97 a barrel, after dropping $2.12 to $66.88 yesterday.
Brent for January settlement gained as much as 92 cents to $71.46 a barrel on the London-based ICE Futures (SPX) Europe exchange.
Copper declined for the seventh time in eight days amid concerns of waning global demand. The metal for delivery in three months dropped 0.5 percent to $6,381 a metric ton on the London Metal Exchange. Aluminum and zinc fell on the LME.
To contact the reporters on this story: Nick Gentle in Hong Kong at ngentle2@bloomberg.net; Stephen Kirkland in London at skirkland@bloomberg.net
To contact the editors responsible for this story: Stephen Kirkland at skirkland@bloomberg.net; Stuart Wallace at swallace6@bloomberg.net Stuart Wallace
