By Stephen Kirkland and Lynn Thomasson - Nov 17, 2011 5:27 PM GMT+0700
Stocks fell for a fourth day, the longest stretch of losses in two months, as Spanish and French borrowing costs rose and China’s central bank said it’s not ready to loosen inflation controls. U.S. equity index futures erased gains.
The MSCI All-Country World Index slipped 0.5 percent at 10:25 a.m. in London. The Stoxx Europe 600 Index declined 1.2 percent, while Standard & Poor’s 500 Index futures slid 0.1 percent. The yield on the 10-year Spanish bond rose 34 basis points to 6.75 percent, a euro-era record, with similar-maturity French yields jumping to 2 percentage points more than benchmark German bunds, also a euro-lifetime high. The cost of insuring against default on European government debt approached a record. The Swiss franc weakened against all 16 most-traded peers. Oil erased gains.
Spain sold 3.56 billion euros ($4.8 billion) of bonds at 6.975 percent, while France sold 3.332 billion euros of 2016 notes yielding 2.82 percent. The European Central Bank bought Italian government bonds today, said two people with knowledge of the transactions, who declined to be identified because the trades are private. U.S. housing starts probably fell last month, economists said before a Commerce Department report.
“It’s clear that there’s no escaping the gravity of the European debt story as central bankers continue their struggle to find an appropriate resolution,” said Harley Salt, head of sales trading at IG Markets in Melbourne. “Bond yields can expect to remain very much in focus.”
‘Difficult Environment’
Six stocks fell for each that gained in the Stoxx 600 and all 19 industry groups declined. Voestalpine AG sank 4.9 percent as Austria’s biggest steelmaker cut its profit outlook for the full year, citing a “difficult economic environment.” Christian Hansen Holding A/S slid 4.3 percent as a person familiar with the transaction said PAI Partners sold a 1.7 billion-krone ($308 million) stake in the Danish food- ingredients maker.
The increase in S&P 500 futures indicated the U.S. gauge will rebound from yesterday’s 1.7 percent drop. Applied Materials Inc. slid 2.5 percent in after-hours New York trading as the largest producer of chipmaking equipment forecast first- quarter sales and profit that missed analysts’ predictions.
A report at 10 a.m. New York time may show manufacturing in the Philadelphia region expanded at the fastest pace in seven months in November, a sign U.S. factories may provide more support for the recovery. The Federal Reserve Bank of Philadelphia’s general economic index increased to 9 from 8.7 last month, according to the median estimate of economists surveyed by Bloomberg.
Jobless Claims
Other data may show U.S. housing starts fell 7.3 percent in October, the biggest drop since April, and initial claims for jobless benefits were little changed last week, economists said.
French five-year yields climbed 10 basis points. The extra yield investors demand to hold the nation’s 10-year debt instead of bunds increased 13 basis points to 203 basis points.
The Markit iTraxx SovX Western Europe Index of credit- default swaps on 15 governments rose six basis points to 361, compared with a record 362 reached on Nov. 15.
The cost for European banks to fund in the U.S. currency rose for a fourth day, to the highest since December 2008. The three-month cross-currency basis swap, the rate banks pay to convert euro payments into dollars, increased to 124 basis points below the euro interbank offered rate, from 123 yesterday.
Franc Weakens
The Swiss franc slid 0.3 percent against the euro and depreciated 0.1 percent versus the dollar, falling for the fourth straight day. The euro appreciated 0.2 percent to $1.3488, snapping a three-day decline.
New York crude fell 0.3 percent to $102.23 a barrel. Nickel, aluminum, zinc and copper fell more than 1 percent.
The MSCI Emerging Markets Index slipped 0.2 percent. The Hang Seng China Enterprises Index sank 1 percent in Hong Kong. Poland’s WIG20 Index lost 1.6 percent in Warsaw, led by KGHM Polska Miedz SA, the country’s only copper producer. India’s Sensex sank 1.5 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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