By Stephen Kirkland - Dec 7, 2011 7:10 PM GMT+0700
Dec. 7 (Bloomberg) -- Huang Yiping, the Hong Kong-based chief economist for emerging Asia at Barclays Capital, talks about Europe's sovereign debt crisis and its implications for economies in the region and in Asia. Huang also discusses China central bank monetary policy. He speaks with Susan Li on Bloomberg Television's "First Up." (Source: Bloomberg)
Dec. 7 (Bloomberg) -- Mark Grant, a managing director at Southwest Securities Inc. in Fort Lauderdale, Florida, talks about the European debt crisis, its implications for financial markets and his investment strategy. European Union leaders plan to meet Dec. 8-9 in Brussels to end a crisis that led to bailouts of Greece, Ireland and Portugal, and now threatens to engulf Italy. Grant speaks with Susan Li on Bloomberg Television's "First Up." (Source: Bloomberg)
Stocks and U.S. index futures rose on speculation that European leaders will agree on steps to ease the debt crisis at a summit tomorrow. German bonds rebounded after bids exceeded the target at an auction.
The Stoxx Europe 600 Index jumped 0.3 percent at 7:05 a.m. in New York, after gaining as much as 1.2 percent. Standard & Poor’s 500 Index futures increased 0.4 percent. The yield on the German five-year note fell five basis points to 1.05 percent, with Portugal’s two-year yield dropping after borrowing costs declined at a government sale of three-month bills. The euro slid 0.2 percent to $1.3375, reversing an earlier advance.
Germany got bids for 8.67 billion euros ($11.6 billion) of five-year notes at an auction today, more than the maximum sales target of 5 billion euros, the Bundesbank said. Officials are negotiating a bigger rescue effort to discuss at the European summit, the Financial Times reported yesterday. Stocks (MXWD) pared gains and the euro declined against the dollar after a German government official said the country rejects proposals to combine the current and permanent euro-area rescue funds.
“There appears to be growing market confidence that European politicians will come up with something substantial,” said James Knightley, a senior economist at ING Bank NV in London. “There are still plenty of question marks over how the leveraging up of the rescue funds will be achieved.”
The MSCI All-Country World Index climbed 0.3 percent. Three shares advanced for every two that fell in Europe’s Stoxx 600.
The gain in U.S. futures indicated the S&P 500 will increase for a third day. The 10-year Treasury note yield rose for the third day, increasing one basis point to 2.10 percent.
The euro depreciated against 13 of its 16 major peers, losing 0.2 percent versus the yen.
‘Under Pressure’
“The euro has come back under some pressure after the reports of a German official dampening down expectations of an agreement on the rescue fund coming out of the EU summit,” said Ian Stannard, head of European currency strategy at Morgan Stanley in London.
The yield on the German 10-year bund fell six basis points. The Portuguese two-year note yield dropped 73 basis points. The government issued bills due March 2012 at an average yield of 4.873 percent, down from 4.895 percent at a previous auction on Nov. 16. Italian 10-year bond yields declined six basis points.
The cost of insuring against default on European government and bank debt fell. The Markit iTraxx SovX Western Europe Index of credit-default swaps on 15 governments dropped five basis points to 320, while the Markit iTraxx Financial Index of contracts linked to the senior bonds of 25 banks and insurers declined 18 basis points to 249.
Highest Since 2009
The rate at which London-based banks say they can borrow for three months in dollars rose to the highest level since July 2009 as the euro region’s sovereign debt crisis intensifies. The London interbank offered rate, or Libor, for three-month dollar loans climbed to 0.54000 percent, from 0.53775 percent yesterday, data from the British Bankers’ Association showed.
The European Central Bank said demand for three-month dollar loans jumped after it almost halved the cost of the funds in a concerted action with five other central banks including the U.S. Federal Reserve. The ECB said it will lend $50.7 billion to 34 euro-area banks tomorrow for 84 days at a fixed rate of 0.59 percent. That compares with the $395 million lent in the last three-month offering on Nov. 9 at a rate of 1.09 percent.
The MSCI Emerging Markets Index (MXEF) rose 0.7 percent after falling 1.3 percent yesterday, the most since Nov. 23. The Hang Seng China Enterprises Index (HSCEI) gained 2.2 percent in Hong Kong. Benchmark gauges in Turkey, Thailand, Indonesia and Taiwan added more than 1 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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