By Stephen Kirkland - Nov 17, 2011 8:17 PM GMT+0700
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Traders monitor stock price movements on electronic screens inside the Bolsas y Mercados stock exchange in Madrid. Photographer: Denis Doyle/Bloomberg
Nov. 17 (Bloomberg) -- Marino Valensise, chief investment officer at Baring Asset Management Ltd., talks about euro-zone bond markets, Chinese monetary policy and the outlook for equities. He speaks from London with Francine Lacqua on Bloomberg Television's "On the Move." (Source: Bloomberg)
Stocks fell for a fourth day, the longest stretch of losses in two months, while U.S. index futures and commodities declined as Spanish and French borrowing costs rose and China’s central bank said it’s not ready to loosen inflation controls.
The Stoxx Europe 600 Index lost 1.4 percent at 8:10 a.m. in New York. Standard & Poor’s 500 Index futures sank 0.3 percent. The 10-year Spanish bonds trimmed earlier declines, with the yield rising 27 basis points to 6.67 percent. The price of default insurance on European government debt climbed to a record, while the cost for banks to fund in the dollar reached the highest since 2008. The Swiss franc weakened against its major peers. Oil fell 1.6 percent.
“The crisis is being driven by systemic causes and until that systemic weakness has been addressed, all euro government bonds aside from bunds will continue to come under pressure,” said Richard McGuire, a fixed-income strategist at Rabobank International in London.
Spain sold 3.56 billion euros ($4.8 billion) of 10-year bonds at 6.975 percent, while France sold 3.33 billion euros of 2016 notes yielding 2.82 percent. German Chancellor Angela Merkel said that neither joint euro-area bonds nor using the European Central Bank as a lender of last resort offer solutions to the debt crisis at present. The ECB bought Spanish and Italian bonds today, according to at least two people with knowledge of the transactions, who declined to be identified because the trades are private.
‘Difficult Environment’
More than 15 stocks fell for every one that gained in the Stoxx 600. Voestalpine AG sank 8.5 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 5.2 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 S&P 500 dropped 1.7 percent yesterday. 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.
Demand at Spain’s auction was 1.54 times the amount sold, the lowest since 2008, according to data compiled by Bloomberg. French five-year bonds rebounded, with the yield slipping three basis points. The extra yield investors demand to hold the nation’s 10-year debt instead of bunds increased to as much as 204 basis points, before trading 10 basis points lower at 179.
The Markit iTraxx SovX Western Europe Index of credit- default swaps on 15 governments rose eight basis points to 363. The cost for European banks to fund in the U.S. currency rose for a fourth day. The three-month cross-currency basis swap, the rate banks pay to convert euro payments into dollars, increased to 131 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 0.2 percent versus the dollar, falling for the fourth straight day. The euro depreciated less than 0.1 percent to $1.3451.
New York crude fell to $100.43 a barrel, after climbing 3.2 percent yesterday. Nickel, aluminum, zinc and copper fell more than 1.5 percent.
The MSCI Emerging Markets Index slipped 0.8 percent. The Hang Seng China Enterprises Index sank 1 percent in Hong Kong. Poland’s WIG20 Index lost 2 percent in Warsaw, led by KGHM Polska Miedz SA, the country’s only copper producer. Benchmark gauges in Russia and India lost at least 1.8 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
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