Euro Rebounds Before German Data

By Shiyin Chen - Nov 24, 2011 3:08 PM GMT+0700

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Nov. 24 (Bloomberg) -- George Feiger, chief executive offer of Contango Capital Advisors Inc., a San Francisco-based wealth management firm, talks about the impact of the eurozone crisis on U.S. financial markets and his investment strategy. Feiger speaks with Susan Li on Bloomberg Television's "First Up." (Source: Bloomberg)

European stocks rose for the first time in six days and the euro rebounded from a six-week low against the dollar before data on German business confidence. Asian shares dropped, led by Japanese equities.

The Stoxx Europe 600 Index gained 0.7 percent at 8:01 a.m. in London, climbing from a seven-week low. Standard & Poor’s 500 futures gained 0.7 percent, after a six-day slump in the U.S. stocks gauge. The Nikkei 225 Stock Average sank 1.8 percent after S&P signaled it may be getting closer to lower Japan’s sovereign grade. The euro strengthened 0.3 percent to $1.3375, while South Korea’s won slid to a six-week low. Copper added 0.7 percent in London and oil advanced 0.5 percent in New York.

Data today may show a gauge of business confidence in Germany slipped for a fifth month after earlier figures showed consumer and company spending drove a third-quarter rebound in the economy. The nation’s 10-year yields jumped yesterday after bids at a sale of securities repayable in January 2022 fell 35 percent short of the 6 billion euros ($8 billion) on offer. S&P said Japanese Prime Minister Yoshihiko Noda’s administration hasn’t made progress in tackling the public debt burden.

“Investors have already discounted a significant part of risk as we know it,” Mark Konyn, chief executive officer of RCM Asia Pacific Ltd., said in a Bloomberg Television interview. Today’s business confidence data “will be a key litmus test, in terms of what happened yesterday on the auction,” he said.

Stocks Rebound

About five shares climbed for every one that fell on the Stoxx 600, which snapped a five-day, 7.1 percent drop. The measure yesterday slumped to the lowest close since Oct. 4. Germany’s DAX Index rallied 1.3 percent, halting an eight-day retreat.

S&P 500 futures expiring in December signal U.S. stocks may halt a six-day slump that dragged the benchmark index down to the lowest level since Oct. 7. The market will be closed today for the Thanksgiving holiday and trading will end at 1 p.m. tomorrow.

The Ifo institute’s business climate index for Germany fell to 105.2 in November, a 20-month low, according to the median forecast of economists in a Bloomberg News survey. Private consumption expanded 0.8 percent from the second quarter and company investment in plant and machinery jumped 2.9 percent, the Federal Statistics Office in Wiesbaden said today.

Gross domestic product advanced 0.5 percent from the previous three months, the office said, confirming an initial estimate published on Nov. 15. That was an acceleration from the 0.3 percent growth notched in the second quarter.

The euro recouped some of the 1.2 percent slump yesterday, when German 10-year yields climbed 23 basis points and the cost to insure European government debt rose to a record. Bunds extended declines today, driving yields higher by as much as 10 basis points to 2.25 percent.

Yen, Won

The yen traded at 74.16 per dollar, paring gains of as much as 0.4 percent, after Takahira Ogawa, director of sovereign ratings at S&P said Japan’s finances are getting “worse and worse” every day. The won retreated 0.6 percent to 1,158.80 per dollar, after touching 1,160.50 earlier, the lowest level since Oct. 14. Taiwan’s dollar declined 0.1 percent to NT$30.438 against its U.S. counterpart, also a fifth day of losses.

The MSCI Asia Pacific Index slipped 0.3 percent, after earlier dropping as much as 0.7 percent to the lowest intraday level since Oct. 6. The gauge tumbled 1.8 percent yesterday, when Japan’s markets were closed for a holiday.

JFE Holdings Inc. retreated 1.7 percent after the Nikkei newspaper reported the steelmaker is reducing its production target. HTC Corp. (2498) sank 6.9 percent to a 16-month low in Taipei after the company cut its revenue forecast as much as 23 percent. The smartphone maker had earlier forecast growth of 20 percent to 30 percent. Hanwha Chemical Corp. dropped 4.7 percent after it said quarterly profit fell 24 percent.

Three-month copper gained 0.7 percent to $7,290.25 a metric ton on the London Metal Exchange, pacing an advance among raw materials. Nickel futures increased 1.2 percent and tin climbed 2 percent. Oil for January delivery added 0.5 percent to $96.63 a barrel in New York, after having dropped 1.9 percent yesterday.

To contact the reporter on this story: Shiyin Chen in Singapore at schen37@bloomberg.net

To contact the editor responsible for this story: Sandy Hendry at shendry@bloomberg.net