By Stephen Kirkland - Oct 20, 2011 6:02 PM GMT+0700
Oct. 20 (Bloomberg) -- Kirk Hartman, the Los Angeles-based chief investment officer for Wells Capital Management, talks about his investment strategy. Hartman also discusses Europe's sovereign debt crisis and the global economy. He speaks with Susan Li on Bloomberg Television's "First Up." (Source: Bloomberg)
Stocks fell and metals declined as a split emerged among European leaders on a rescue plan and the Federal Reserve said companies grew more pessimistic about the U.S. economy. Standard & Poor’s 500 Index futures rose, while Spanish bonds retreated.
The MSCI All-Country World Index slipped 0.5 percent at 7 a.m. in New York. The Stoxx Europe 600 Index retreated 0.3 percent, after declining 1.5 percent. S&P 500 futures advanced 0.6 percent. The euro strengthened 0.4 percent, reversing earlier losses. The Spanish two-year note yield jumped nine basis points. Copper, zinc and tin slid more than 2 percent.
Luxembourg Prime Minister Jean-Claude Juncker, who chairs the group of euro-area finance ministers, indicated an impromptu meeting of European leaders in Frankfurt yesterday failed to resolve differences ahead of a summit scheduled for this weekend. The Fed’s Beige Book survey released yesterday showed companies reported more doubt about the recovery even as the economy maintained its expansion last month.
“Time is running out,” Gary Jenkins, head of fixed income at Evolution Securities in London, said in a report. “I hate to think what the market will be like next week if there is a complete lack of clarity or agreement from the European Union this weekend.”
Paring Losses
Stocks pared losses and the euro rebounded after European Commission President Jose Barroso expressed optimism that euro- area leaders will reach agreement this weekend. Draft guidelines of an EU working paper obtained by Bloomberg indicated the European Financial Stability Facility would provide loans to national governments that in turn would inject the capital into lenders deemed to pose systemic risk.
Two shares declined for every one that gained on the Stoxx 600. Schneider Electric SA (SU), the world’s biggest maker of low-and medium-voltage equipment, plunged 7.4 percent after trimming its 2011 profit target for the second time in four months. Actelion Ltd. (ATLN) sank 12 percent as Europe’s largest biotechnology company said it expects drug sales to decrease next year.
Nokia Oyj climbed 11 percent after reporting a smaller- than-estimated loss and forecasting the handset business to be profitable this quarter.
The gain in S&P 500 futures indicated the U.S. gauge may pare yesterday’s drop. EBay Inc. fell 3.4 percent in German trading after the largest online marketplace forecast sales and profit that missed some analysts’ estimates.
Seventy percent of the 66 companies in the index that have reported earnings since Oct. 11 have beaten analysts’ profit estimates, Bloomberg data show. Microsoft Corp., the world’s largest software maker, and AT&T Inc. are among 32 members of the S&P 500 due to release results today.
‘Modest’ Growth
The Beige Book said many Fed districts described the pace of growth as “modest” or “slight” in September, even though overall economic activity continued to expand. Data today may show initial jobless claims eased to 400,000 in the week ended Oct. 15 from 404,000 previously, while a gauge of leading indicators grew at a slower pace.
The yield on the Spanish 10-year bond rose seven basis points as Spain sold 3.91 billion euros ($5.37 billion) of 10- year bonds and notes maturing in 2017 and 2019, compared with the Treasury’s maximum target for the sale of 4.25 billion euros, data from the Bank of Spain showed.
French Auction
The French two-year yield rose three basis points after the government auctioned 4.26 billion euros of two- and five-year notes. The yield on the Greek 6.25 percent bond maturing in June 2020 increased nine basis points.
The euro gained 0.4 percent against the yen. New Zealand’s dollar rose against all 16 major peers, advancing 0.6 percent versus the U.S. currency and 0.7 percent against the yen. The Dollar Index lost 0.4 percent.
Copper fell 3 percent, after sinking 4.4 percent in the previous three days. Zinc declined 2.8 percent and tin slipped 2.4 percent. Oil rose 0.5 percent to $86.50 a barrel.
The MSCI Emerging Markets Index retreated 1.9 percent, the biggest decline on a closing basis in more than two weeks. The Shanghai Composite Index slumped 1.9 percent to a 31-month low on concern China may persist with policies to rein in lending. Risks stemming from private lending must be “strictly controlled,” China’s banking regulator said.
China Southern Airlines Co. led losses for carriers after China Business News said the aviation regulator reduced its estimates for passenger volume growth.
Thailand’s SET Index lost 3.1 percent as the central bank said it will cut its economic growth forecast as the worst floods in 50 years threaten to keep factories closed for months. South Korea’s Kospi Index (KOSPI) declined 2.7 percent and benchmark gauges in Poland, Turkey, Thailand and Taiwan fell at least 1 percent.
To contact the reporter on this story: Stephen Kirkland in London at skirkland@bloomberg.net
To contact the editor responsible for this story: Stuart Wallace at swallace6@bloomberg.net
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