By Stephen Kirkland - Nov 10, 2011 5:32 PM GMT+0700
Nov. 10 (Bloomberg) -- Marino Valensise, chief investment officer at Baring Asset Management Ltd., discusses Europe's debt crisis, global equity markets and investment allocation. Valensise speaks in Hong Kong with Susan Li on Bloomberg Television's "First Up." (Source: Bloomberg)
Nov. 10 (Bloomberg) -- Scott Wren, senior equity strategist with Wells Fargo Advisors, talks about Europe's debt crisis, its implications for global financial markets and his investment strategy. U.S. stocks sank as a surge in Italian bond yields intensified the credit crisis and concern grew that European leaders may be unable to keep the euro zone intact. Wren speaks with Susan Li on Bloomberg Television's "First Up."(Source: Bloomberg)
The euro strengthened and Italy’s bonds rallied as the European Central Bank bought the country’s debt and the government sold 5 billion euros ($6.8 billion) of bills. U.S. stock-index futures and oil rose.
The euro appreciated 0.4 percent to $1.3589 at 10:30 a.m. in London, after falling as much as 0.4 percent. The yield on Italy’s 10-year bond dropped 26 basis points. The benchmark Stoxx Europe 600 Index added less than 0.1 percent, while Standard & Poor’s 500 Index futures advanced 0.9 percent. The S&P GSCI index of 24 commodities climbed 0.4 percent, with oil in New York up 0.9 percent.
Italy sold one-year bills at an average yield of 6.087 percent after yields yesterday on 10-year notes surged past the 7 percent level at which Greece, Ireland and Portugal sought international bailouts. German Chancellor Angela Merkel’s Christian Democratic Union may adopt a motion at a party congress next week to allow euro members to exit the currency area, a senior CDU lawmaker said. More than $1 trillion was erased from the value of global equities yesterday.
“Uncertainties still linger as to the political situation going forward and the capacity of bailout mechanisms to restore a more robust equilibrium,” Sean Maloney, a strategist at Nomura International in London, wrote in a note. “The wildcard in the process remains the ECB and the scope for greater utilization of its balance sheet and the implications of a change in stance here could, in the short term at least, be significant.”
Italy Bonds
The Italian two-year note yield slid 57 basis points, after jumping 82 basis points yesterday. The additional yield investors demand to hold 10-year French, Spanish, Austrian and Belgian bonds instead of benchmark German bunds rose earlier to euro-era records amid concern the region’s debt crisis is spreading.
The ECB bought Italian government bonds, according to three people familiar with the transactions, who declined to be identified because the deals are confidential. The ECB was not immediately available for comment when contacted by telephone by Bloomberg.
The MSCI Asia Pacific Index declined 3.3 percent, the most since Sept. 22. The Hang Seng China Enterprises Index of mainland companies listed in Hong Kong tumbled 5.7 percent as China’s export growth slowed.
The Dollar Index, which tracks the U.S. currency against those of six trading partners, fell 0.3 percent after advancing as much as 0.3 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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