By Stephen Kirkland - Nov 10, 2011 9:31 PM GMT+0700
Nov. 10 (Bloomberg) -- Roger Bootle, managing director of Capital Economics Ltd., talks about Europe's sovereign debt crisis and its implications for the global economy and financial markets. Bootle speaks with Rishaad Salamat, Susan Li, John Dawson and Zeb Eckert on Bloomberg Television's "Asia Edge." (Source: Bloomberg)
Nov. 10 (Bloomberg) -- Barry Knapp, head of U.S. equity strategy at Barclays Capital, talks about the European sovereign-debt crisis and U.S. stock market. He speaks with Sara Eisen and Erik Schatzker on Bloomberg Television's "InsideTrack." (Source: Bloomberg)
Stocks rose, with the Standard & Poor’s 500 Index rebounding from its worst drop since August, as a retreat in Italian bond yields and the naming of a new Greek premier eased concern Europe’s debt crisis will spiral out of control. The euro strengthened and Treasuries fell.
The S&P 500 rose 1 percent at 9:31 a.m. in New York as an unexpected drop in jobless claims also lifted sentiment. The Stoxx Europe 600 Index added 0.5 percent. Italy’s 10-year bond yield dropped 41 basis points to 6.84 percent after the European Central Bank bought the country’s debt and the nation sold all the bills planned at an auction. The euro appreciated 0.6 percent to $1.3619. The S&P GSCI index of 24 commodities climbed 0.8 percent, with oil in New York up 1.8 percent.
Financial shares helped lead gains in equities after Italy sold 5 billion euros ($6.8 billion) of one-year bills and former vice president of the European Central Bank Lucas Papademos was named head of a national unity government in Greece. U.S. initial jobless claims fell by 10,000 to 390,000, the lowest level in seven months.
“Papademos being appointed for the new unity government is constructive,” Mike Ryan, the New York-based chief investment strategist at UBS Wealth Management Americas, said in a telephone interview. His firm oversees $715 billion. “In the U.S., a decline in claims is very positive. The economic data will come back into focus as we shift our vision away from the political fear in the euro zone.”
More than $1 trillion was erased from the value of global equities yesterday, with the S&P 500 sliding 3.7 percent. Cisco Systems Inc. rallied today after earnings topped analyst estimates.
Jobless claims fell by 10,000 to 390,000 in the week ended Nov. 5, the Labor Department said. The median forecast of economists in a Bloomberg News survey called for 400,000 new claims. Another report showed the U.S. trade deficit unexpectedly narrowed in September to the lowest level this year as exports surged to a record high.
The Dollar Index, which tracks the U.S. currency against those of six trading partners, fell 0.5 percent after advancing as much as 0.3 percent.
Three shares rose for every two that fell in the Stoxx 600. European Aeronautic Defence and Space Co. rose 5 percent after reporting higher third-quarter profit. Svenska Cellulosa AB gained 7.7 percent after agreeing to buy Georgia-Pacific LLC’s European tissue operations.
K+S AG retreated 6.3 percent as Europe’s largest producer of potash pared its outlook for sales and profit as economic volatility prompts wholesalers to scale back orders. Vedanta Resources Plc slid 7.4 percent after the largest copper producer in India said fiscal first-half profit dropped 92 percent on foreign-exchange losses.
Italy Bonds
The Italian two-year note yield slid 93 basis points to 6.27 percent, 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 wasn’t 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 MSCI Emerging Markets Index slipped 2.1 percent.
New York oil climbed 1.8 percent to $97.44 a barrel, the sixth gain in seven days. Copper fell 1.6 percent. China is the biggest buyer of the metal. Gold for immediate delivery added 0.1 percent to $1,771.55 an ounce, after earlier dropping as much as 0.9 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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