BLBG: Europe Stocks Fall on Stimulus Concern as Treasuries Rise
European stocks declined on speculation a central bank stimulus plan will fail to shore up the economy, and U.S. equity-index futures dropped before a jobs report. Treasuries rose with the yen as Federal Reserve officials cautioned against increasing interest rates too soon.
The Stoxx Europe 600 Index fell 0.4 percent at 7 a.m. in New York. Standard & Poor’s 500 Index futures slipped 0.3 percent after gauge’s biggest gain in three weeks yesterday. Banco Santander SA sank the most since May 2010 after selling shares. The yield on 10-year Treasuries decreased two basis points to 2 percent. Japan’s currency strengthened 0.4 percent against the dollar. Oil slid in London, extending its weekly decline to 10 percent.
European Central Bank staff presented policy makers with models for buying as much as 500 billion euros ($591 billion) of investment-grade assets, according to a person who attended a Governing Council meeting. Consumer prices fell last month for the first time in more than five years and ECB President Mario Draghi has signaled the deflationary risks may demand a response. The U.S. unemployment rate probably dropped to 5.7 percent last month, economists said before today’s Labor Department report.
“This has the potential to have a negative impact as it is only 500 billion euros,” Soeren Steinert, who helps manage $24 billion as associate director for equities trading at Quoniam Asset Management GmbH in Frankfurt, said in a phone interview. “Other higher numbers were rumored -- even trillions -- and Draghi talked about unlimited firepower. So these dramatic words built up expectations. I don’t think this is big enough.”
Fed Outlook
Treasuries extended this week’s gains after Boston Fed President Eric Rosengren said low inflation will allow the central bank to move gradually when it begins raising interest rates. Minneapolis Fed President Narayana Kocherlakota said higher rates would hinder a recovery in inflation.
European banks declined the most among 19 industry groups in the Stoxx 600, with trading volumes in the broader gauge 18 percent higher than the 30-day average, according to data compiled by Bloomberg. Santander tumbled 10 percent after its board approved plans to cut its dividend and sell shares for as much as 7.5 billion euros ($8.8 billion).
The S&P 500 jumped 1.8 percent yesterday, the most since Dec. 18. The gauge has advanced 0.2 percent this week.
U.S. employers probably added 240,000 nonfarm jobs in December, following a 321,000 gain in November, according to the median of 98 estimates in a Bloomberg survey of economists. The jobless rate fell to the lowest since 2008, a separate survey showed.
Starbucks COO
Starbucks Corp. fell 1.3 percent in German trading after saying its chief operating officer will go on leave.
Developing-nation shares rose for a third day, headed for a fourth week of gains. The MSCI Emerging Markets Index advanced 0.2 percent, extending this week’s gain to 0.8 percent. The gauge has advanced 0.5 percent this year, compared with a 0.9 percent decline in the developed-nation benchmark index.
The Hang Seng China Enterprises Index advanced 0.5 percent while the Shanghai Composite Index slipped 0.2 percent. Shares in Shanghai erased a gain of as much as 3.4 percent in the last half hour of trading, as traders weighed the prospect of stimulus amid data signaling a deeper economic slowdown.
China Slowdown
China’s factory-gate prices extended a record stretch of declines, with the sharpest drop in two years in December. The producer-price index slumped 3.3 percent from a year earlier, the National Bureau of Statistics said in Beijing today, compared with the median projection for a 3.1 percent decline in a survey of analysts by Bloomberg News.
Russia’s ruble weakened 1.7 percent, leaving it 8.7 percent lower this week. The Micex index slipped 2.4 percent. Fitch Ratings is scheduled to review the country’s credit ranking today.
Sri Lanka’s benchmark equity index advanced 1.4 percent to a 2011 high after President Mahinda Rajapaksa conceded defeat in an election that ended his decade-long rule.
The yen rose against 14 of its 16 major counterparts. It climbed for a second day versus the euro, adding 0.2 percent, set for the biggest weekly advance since 2012.
Britain’s pound gained after a report showed U.K. manufacturing production jumped the most in seven months in November. Sterling added 0.4 percent to $1.5151.
Spanish bonds fell, extending a weekly decline, amid a glut of debt sales in the euro area. The yield rose three basis points to 1.70 percent, up from 1.50 percent on Jan. 2.
Brent in London dropped 0.8 percent to $50.56 a barrel and West Texas Intermediate crude slipped 0.3 percent to $48.67 in New York.
U.S. natural gas futures added 1.1 percent to $2.96 per million British thermal units. New York City will be dusted with snow starting early today as Buffalo is buried in as much as two feet by an arctic air mass, the National Weather Service said.
Gold for immediate delivery advanced 0.3 percent to $1,212.58 an ounce, while platinum gained 0.2 percent and palladium rose 0.4 percent.
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 Paul Dobson
