Credit risk approaches four-month high; oil near one-month low U.S. jobs report will probably show economy improving Share on Facebook Share on Twitter Stocks extended their descent as the build-up to next week’s U.S. presidential election overshadowed signs that the world’s largest economy was improving. Treasuries rose on haven demand. The MSCI All-Country World Index sank to a four-month low as shares in Europe headed for the worst week since February. Treasuries extended this week’s gains, while the yield difference between Spanish and German bonds approached the widest level in two months and perceived credit risk rose to near the highest in four months. Turkey’s lira led losses among emerging-market currencies after the arrest of Kurdish opposition lawmakers. Oil was set for its steepest weekly drop in almost 10 months amid a glut. Global stocks are wrapping up their worst week since the run-up to Britain’s June vote to leave the European Union, having slumped as opinion polls showed a dwindling lead for Democratic presidential candidate Hillary Clinton before America votes on Tuesday. Gauges of expected volatility in equities and currencies have increased, with Clinton -- seen as the more predictable contender among investors -- only just ahead of Republican rival Donald Trump in two surveys released Thursday. The odds of a Federal Reserve rate increase by year-end rose to 78 percent on Thursday from 69 percent at the end of last week, futures contracts indicated. The U.S. employment report is forecast to show employers added 173,000 workers in October, versus 156,000 in September, according to a Bloomberg survey of economists. The payrolls report “has less potential significance than is often the case for obvious reasons, with the U.S. election looming,� said Neil Mellor, a London-based currency strategist at Bank of New York Mellon Corp. “A hike is pretty much priced in and it’s going to take something quite extraordinary to derail that -- data wise. Election wise, there is still that potential of course.� Stocks The MSCI World gauge slid 0.4 percent at 7:25 a.m. in New York. The Stoxx Europe 600 Index slumped 1 percent and is down 3.7 percent this week. Erste Group Bank AG dragged lenders lower, losing 7.1 percent after Austria’s biggest bank forecast flat revenue next year “at best.� Commerzbank AG fell 0.9 percent after the German bank swung to a loss in the third quarter amid its biggest overhaul since the global financial crisis. Cie. Financiere Richemont SA jumped 8.8 percent after the maker of Piaget jewelry unveiled a sweeping overhaul of top management and its board as it reported a plunge in sales. Among other stocks moving on corporate news: BMW AG slipped 1.5 percent after the luxury-auto maker reported a decline in third-quarter U.S. sales, even as total profit rose 1.1 percent. LafargeHolcim Ltd. climbed 2.8 percent after the world’s largest cement maker raised a 2016 target for savings and said an improvement in prices could continue. L’Oreal SA advanced 2.9 percent after the world’s largest cosmetics maker posted sales that beat estimates on rising demand for high-end brands in North America. Hikma Pharmaceuticals Plc and Novartis AG led health-care stocks lower as people familiar with the matter said U.S. prosecutors are bearing down on generic pharmaceutical companies in a criminal investigation into suspected price collusion. S&P 500 Index futures were little changed after U.S. equities fell for an eighth day Thursday -- their longest losing streak since 2008. The MSCI Emerging Markets Index dropped for a fourth day to a three-month low. Bonds Sovereign bonds in developed countries handed investors a 1.5 percent gain over the last four days, set for the best weekly return since July, a Bloomberg index shows. Treasuries gained on Friday, pushing the yield on 10-year notes down two basis points to 1.79 percent. The yield difference between Spanish and German 10-year bonds increased by two basis points to 1.10 percentage points. The cost of insuring investment-credit corporate debt was set for the biggest weekly increase since June. The Markit iTraxx Europe Index of credit-default swaps on highly rated companies rose one basis point to 76 basis points, the highest since July 8. It’s gained four basis points this week. A gauge of swaps on junk-rated companies climbed two basis points to 338 basis points. Currencies The Bloomberg Dollar Spot Index pared this week’s loss to 0.8 percent. It fell over the last five trading sessions as election concerns outweighed a pickup in speculation that the Fed will raise interest rates next month. The central bank left policy unchanged at a review this week and signaled that a December rate hike was likely. The yen, euro and Swiss franc all strengthened at least 1 percent this week. Start your day with what’s moving markets. Get our markets daily newsletter. Enter your email Sign Up “The dollar is showing clear signs that investors are worried about a Trump win,� said Sean Callow, a senior strategist at Westpac Banking Corp. in Sydney. “The slide in the dollar against ultra-low-yielding currencies such as euro, yen and Swiss franc is evidence of a flight to safety, reversing a period of optimism where the dollar enjoyed the combination of stronger polling results for Clinton and not entirely coincidental positioning for a Fed hike in December.� The lira slid as much as 1.3 percent to a record after Turkish police detained Kurdish lawmakers in post-midnight raids, extending a crackdown on the opposition as President Recep Tayyip Erdogan consolidates power following a July 15 coup attempt. The yield on 10-year government bonds climbed to a more than five-month high and the Borsa Istanbul 100 Index slid 2.3 percent, the most worldwide. The pound extended a weekly bounce to 2.5 percent, its best performance in eight months, following a hawkish shift by the Bank of England and a court ruling requiring the government to get lawmakers’ approval for Brexit to begin. Commodities The Bloomberg Commodity Index was down 2.9 percent this week, the most since July 8. Oil was little changed in New York after falling 10 percent in the previous five sessions. Crude has given up all its gains since OPEC agreed to trim output as skepticism grows over implementing the deal and as rising U.S. inventories worsen a glut. The OPEC situation is really having an effect and investors are struggling to believe that they’re going to come up with a cohesive deal in November,� said Chris Weston, chief market strategist at IG Ltd. in Melbourne. Gold slipped less than 0.1 percent at $1,301.74 an ounce, trimming this week’s advance to 2.1 percent as it was caught in the crossfire between haven demand and prospects for higher U.S. rates. Zinc retreated from a five-year high in London, while copper fell from its highest level since July. The LMEX Metals Index, which tracks six major base metals, rose to the most in more than 15 months on Thursday as investors bet that a rebound in demand from China, surging coal prices and logistics issues will underpin prices.

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