Stocks Drop as Euro Weakens on Debt Concern While Copper, Italy Bonds Rise

By Stephen Kirkland - Nov 14, 2011 5:25 PM GMT+0700

Stocks and the euro declined on concern Europe will struggle to resolve its debt crisis. Copper climbed as Japan’s economy grew for the first time in a year, while Italian bonds maintained their earlier gains after the nation sold debt.

The Stoxx Europe 600 Index dropped 0.3 percent at 10:15 a.m. in London, and futures on the Standard & Poor’s 500 Index slipped 0.2 percent. Japan’s Nikkei 225 Stock Average climbed 1.1 percent. The euro weakened 0.4 percent to $1.3697. The yield on the Italian five-year bond fell five basis points, with the 10-year U.S. Treasury yield two basis points higher. Copper jumped as much as 3.9 percent.

Italy sold all 3 billion euros ($4.1 billion) of the five- year notes it offered at today’s auction after former European Union Competition Commissioner Mario Monti was asked to set up a government. German Chancellor Angela Merkel said it’s time to embrace a “political union” in Europe to send a message to bondholders that euro-area leaders are serious about ending the sovereign debt crisis. Japan’s gross domestic product grew an annualized 6 percent in the last quarter as exports recovered from the record earthquake on March 11, government data showed.

The yield on Italy’s 10-year bond declined five basis points. The Rome-based Treasury sold the bonds to yield 6.29 percent, the highest since June 1997 and up from 5.32 percent at the last auction on Oct. 13. Demand was 1.47 times the amount on offer, compared with 1.34 times last month.

The 10-year French yield slid eight basis points, with the Spanish yield rising two basis points. The Greek two-year note yield surged 188 basis points, or 1.88 percentage points, to 110.78 percent.

Commodities

Copper led raw materials higher, with the S&P GSCI index of 24 commodities rising to a two-month high. Raw sugar jumped 1.7 percent and soybeans climbed 1.3 percent. Oil in New York fell 0.2 percent after earlier today rising to $99.69 a barrel, the most since July 26.

Three shares fell for every two that gained in the Stoxx 600. Hochtief AG sank 9.8 percent after Germany’s largest construction company delayed the sale of its airport operating business and reported third-quarter earnings that missed estimates. ITV Plc advanced 3 percent as the U.K. broadcaster reported increased revenue.

S&P 500 futures expiring in December were little changed after the U.S. gauge’s 0.9 percent advance last week. The S&P 500 has risen 0.5 percent this year.

Boeing Co. advanced 1.5 percent to $67.91 in German trading. The planemaker secured the biggest order in its almost 100-year history after signing a $26 billion agreement with Emirates for as many as 70 777 aircraft.

The MSCI Emerging Markets Index climbed 1.1 percent. South Korea’s Kospi Index (KOSPI) and Taiwan’s Taiex Index rose more than 2 percent. The Hang Seng China Enterprises Index in Hong Kong jumped 2.8 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