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Yen Gains as Europe Stocks, Spain Bonds Fall; Pound Gains - (Bloomberg)

Posted by Chris Advincula on Nov 5, 2013 6:46:00 AM

The yen strengthened while European stocks fell from a five-year high as the European Union trimmed its growth outlook. Spanish and Italian bonds declined, gold dropped for a sixth day and the pound gained as U.K. services growth unexpectedly accelerated.

Japan’s currency gained 0.3 percent to 98.29 per dollar at 6:15 a.m. in New York. The pound rallied against all of its 16 major counterparts after a gauge of services rose to the highest in 16 years. The Stoxx Europe 600 Index lost 0.2 percent and Standard & Poor’s 500 Index futures slid 0.3 percent. Spain’s 10-year yield jumped seven basis points to 4.08 percent and the rate on Italy’s similar-maturity bond climbed five basis points to 4.16 percent. Gold slipped 0.1 percent.

The euro-area’s economy will expand 1.1 percent in 2014, less than the 1.2 percent forecast in May, and unemployment, now at its highest rate since the euro was introduced, will be 12.2 percent next year, above the 12.1 percent predicted earlier, the Brussels-based commission said today. European Central Bank President Mario Draghi speaks before a policy meeting this week. The U.S. Institute for Supply Management is scheduled to issue its non-factory measure.

“We are all waiting for the ECB on Thursday,” Ion-Marc Vallahu, a co-founder and fund manager at Clairinvest in Geneva, wrote in an e-mail. “Most investors are expecting a rate cut or some sort of stimulus measure, so there is room for disappointment.”

Stimulus Prospects

The yen appreciated as much as 0.7 percent to 132.37 per euro, its strongest level since Oct. 10, as traders weighed the prospects for additional monetary stimulus from the ECB. The euro weakened 0.2 percent to $1.3493. Sterling rose 0.6 percent to $1.6059 and gained 0.7 percent per euro.

German government bonds declined, with the 10-year bund yield climbing three basis points to 1.71 percent. The rate on similar-maturity Treasuries rising 1.5 basis points 2.62 percent.

The cost of insuring against losses on corporate bonds rose from a 3 1/2-year low. The Markit iTraxx Europe Index of credit-default swaps on 125 investment-grade companies increased 0.4 basis point to 83.5 basis points.

More than two shares declined for every one that gained in the Stoxx 600. RSA Insurance Group Plc (RSA) tumbled 6.4 percent as the U.K.’s biggest non-life insurer by market value said it will miss its profitability target after last week’s European windstorms. Bayerische Motoren Werke AG, the world’s largest maker of luxury vehicles, fell 3.2 percent after profit declined. Beiersdorf AG jumped 5.1 percent after the maker of Nivea hand cream increased its sales forecast.

U.S. Growth

The decline in S&P 500 futures indicated the U.S. gauge will fall from a record. The Institute for Supply Management is due to release its non-manufacturing index at 10 a.m. New York time. The gauge will drop to 54 for October from 54.4 the previous month, according to a Bloomberg survey of economists. Reading greater than 50 signal expansion.

A government report on Thursday is forecast to show the U.S. economy grew at a 2 percent annualized rate in the third quarter, compared with a 2.5 percent increase in the previous three months. Economists predict a report the next day will show payrolls climbed by 120,000 in October and the unemployment rate increased to 7.3 percent from 7.2 percent in the previous month, according to a separate survey.

Emerging Markets

The MSCI Emerging Markets Index fell for a fourth day, the longest losing streak in a month, sliding 0.4 percent. India’s Sensex sank 1.3 percent, dropping from a record high as trading resumed following a holiday. The Hang Seng China Enterprises Index retreated 0.5 percent, Taiwan’s Taiex declined 1.1 percent, while South Korea’s Kospi index lost 0.6 percent. Thailand’s The SET Index rebounded from the biggest two-day slide in six weeks, advancing 2 percent.

Gold fell to $1,312.86 an ounce, extending its longest losing streak since May 17. Cotton retreated for a 13th day, the longest run since 1959. Copper rose 0.4 percent to $7,174 a metric ton, the first increase in four days. China is the biggest buyer of copper and is hoarding a record amount of cotton as global production exceeds demand for a fourth consecutive year. West Texas Intermediate crude declined 0.3 percent to $94.38 a barrel.

------With assistance from Jonathan Morgan in Frankfurt, Adam Haigh in Sydney, Emma O’Brien in Wellington, Claudia Carpenter, Paul Dobson, Andrew Rummer. Editors: Stephen Kirkland, Stuart Wallace 


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Source: Bloomberg





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