U.S. Stock Futures, Oil Rise From Six-Week Low

By Stephen Kirkland - Sep 26, 2011 6:22 PM GMT+0700
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BNP Paribas SA, UniCredit SpA and Deutsche Bank AG, the biggest lenders in France, Italy and Germany respectively, rose more than 4 percent. Photographer: Chris Ratcliffe/Bloomberg

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Sept. 26 (Bloomberg) -- Khiem Do, head of multi-asset strategy at Baring Asset Management in Hong Kong, talks about financial market volatility and the outlook for the global economy. Do speaks with Susan Li on Bloomberg Television's "First Up." (Source: Bloomberg)

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Sept. 26 (Bloomberg) -- Paul Hickey, co-founder of Bespoke Investment Group, talks about the outlook for U.S. markets, commodities, and Europe's debt crisis. Hickey speaks with Deirdre Bolton and Erik Schatzker on Bloomberg Television's "InsideTrack." (Source: Bloomberg)

European stocks and U.S. index futures rose, reversing earlier declines, while the euro pared losses as finance chiefs including U.S. Treasury Secretary Timothy F. Geithner urged more efforts to solve the debt crisis. Copper, gold and silver led commodities lower.

The Stoxx Europe 600 Index advanced 2.8 percent at 7:20 a.m. in New York, after slipping 1.4 percent. Standard & Poor’s 500 Index futures climbed 1.8 percent. The euro depreciated 0.2 percent against the yen, and the Dollar Index lost 0.6 percent. The yield on the 10-year Treasury bond rose two basis points. The Greek two-year yield jumped 166 basis points. Copper dropped for a seventh day, while oil rebounded.

Geithner told the annual meeting of the International Monetary Fund that failure to combat the Greek-led turmoil threatens “cascading default, bank runs and catastrophic risk.” Bank of Canada Governor Mark Carney estimated 1 trillion euros ($1.3 trillion) may be needed, while German Chancellor Angela Merkel’s comments that euro-region leaders must erect a firewall around Greece prompted speculation about a European version of the U.S.’s Troubled Asset Relief Program.

“Nothing concrete has come out of the IMF meeting, but there is a lot of talk about the Europe TARP and rate cuts so that has led to optimism in some quarters,” said Ioan Smith, a director at Knight Capital Europe Ltd. in London. “I still think there is a long way to go. Nobody wants to be too long this market.”

More than six stocks gained for every one that fell in the Stoxx 600, which dropped 6.1 percent last week. BNP Paribas SA, UniCredit SpA and Deutsche Bank AG, the biggest lenders in France, Italy and Germany respectively, rose more than 6 percent.

Bank Capital

The European Central Bank is likely to debate restarting covered-bond purchases and more measures to ease monetary conditions next week, a euro-region central bank official said. Reintroduction of 12-month loans to banks will also be discussed at the ECB’s Oct. 6 policy meeting, said the person, who spoke on condition of anonymity because the information is confidential. Interest-rate cuts are likely to be discussed, though they are not on the current agenda, the official said.

ECB Governing Council member Ewald Nowotny said he cannot exclude that the bank will lower its benchmark interest rate, Market News International reported. French banks have enough capital to withstand possible losses from Greece-related risks, Journal du Dimanche yesterday cited Bank of France Governor Christian Noyer as saying.

The advance in S&P 500 futures indicated the benchmark gauge will rise for a second day.

Home Sales

A Commerce Department report due at 10 a.m. in Washington may show purchases of new houses in the U.S. declined in August to the lowest level in six months as buyers sought cheaper distressed properties, according to the median estimate in a Bloomberg News survey of 59 economists.

The euro slid against 10 of its 16 major counterparts. New Zealand’s dollar fell 0.6 percent versus its U.S. counterpart, sliding for the sixth straight day in the longest run of declines since September 2008, after the country’s trade deficit was wider than economists estimated.

The yield on the Greek 10-year bond rose 35 basis points, driving the difference in yield with benchmark German bunds 31 basis points higher to 22.2 percentage points.

Default Risk

The cost of insuring French, German and Belgian debt rose to records, before trading lower. Credit-default swaps on German debt climbed 2.5 basis points to a record 111, contracts on France rose seven basis points to an all-time high of 204 and Belgium was six basis points higher at 301, also the highest ever, CMA prices show.

Oil in New York rose 0.8 percent to $89.47 a barrel, after falling as much as 3.4 percent. Silver dropped 9.6 percent, bringing its decline to 29 percent over four days. Copper fell 1.9 percent.

The MSCI Emerging Markets Index fell 0.8 percent. Thailand’s SET Index tumbled 5.7 percent after the central bank said it may cut its economic growth forecasts. The won and the rupiah each depreciated by at least 2 percent versus the dollar.

Russia’s Micex Index rose 3.4 percent after Prime Minister Vladimir Putin said he would run again for president next year.

To contact the reporters on this story: Stephen Kirkland in London at skirkland@bloomberg.net; Shiyin Chen in Singapore at schen37@bloomberg.net

To contact the editor responsible for this story: Stuart Wallace at swallace6@bloomberg.net