By Stephen Kirkland and Lynn Thomasson - Dec 12, 2011 7:08 PM GMT+0700
Dec. 12 (Bloomberg) -- Eyal Dabby, head of equity research at Bank Leumi Le-Israel Ltd., discusses the outlook for Israeli equity markets in 2012. He speaks from Tel Aviv with Maryam Nemazee on Bloomberg Television's "The Pulse." (Source: Bloomberg)
Dec. 12 (Bloomberg) -- Nigel Tupper, Asia Pacific strategist and chief global quantitative strategist at Bank of America Merrill Lynch, talks about the outlook for Asian financial markets and his investment strategy. Tupper speaks in Hong Kong with Susan Li on Bloomberg Television's "First Up." (Source: Bloomberg)
European stocks and U.S. equity futures fell and the euro weakened as Moody’s Investors Service said it will review ratings for countries in the region. Italian bonds stayed lower after a debt sale, while commodities retreated.
The Stoxx Europe 600 Index dropped 0.5 percent at 7:05 a.m. in New York, after declining as much as 1.3 percent. Standard & Poor’s 500 Index futures lost 0.7 percent. The euro depreciated 1 percent to $1.3253. The 10-year Italian bond yield jumped 42 basis points as the government sold 7 billion euros ($9.3 billion) of bills. The cost of insuring against default on European government debt approached a record high. Silver and natural gas declined.
Last week’s European Union summit offered few new measures and doesn’t diminish the risk of credit-ranking revisions, Moody’s said today. While a European accord to limit budget deficits represents “progress,” the onus is on governments rather than the European Central Bank to resolve the crisis with financial backing, Bundesbank President Jens Weidmann told Frankfurter Allgemeine Sonntagszeitung, according to a report published yesterday.
“The European situation will continue to bother us into next year as policy initiatives seem insufficient,” said Mark Matthews, the Singapore-based head of research for Asia at Bank Julius Baer & Co., which oversees about $180 billion globally.
LSE Rating Review
Three shares fell for every one that advanced in the Stoxx 600, extending last week’s 0.1 percent drop. Xstrata Plc and Eurasian Natural Resources Corp. led mining companies lower. London Stock Exchange Group Plc (LSE) slipped 4.2 percent as S&P placed its credit rating on review for a downgrade and the company agreed to buy the 50 percent of FTSE International Ltd. it doesn’t already own from Pearson Plc.
The decline in S&P 500 futures signaled the U.S. equity benchmark may trim its 1.7 percent gain on Dec. 9. The measure has climbed for two straight weeks, its first back-to-back weekly advance since October.
The two-year Italian note yield climbed 29 basis points. The government sold 365-day bills at an average yield of 5.952 percent, compared with 6.087 percent at the previous auction.
The extra yield investors demand to hold 10-year French bonds instead of benchmark German bunds climbed 11 basis points as the government prepared to offer as much as 6.5 billion euros of 91-, 182- and 308-day instruments.
The Markit iTraxx SovX Western Europe Index of credit- default swaps on 15 governments climbed for a fifth day, jumping seven basis points to 370, the highest since Nov. 28, close to its all-time high of 385. The Markit iTraxx Financial Index of contracts linked to the senior bonds of 25 banks and insurers increased five basis points to 301.
U.S. Debt Sales
The yield on the 30-year Treasury bond fell four basis points to 3.07 percent, with 10-year yields also slipping four basis points.
U.S. debt auctions over the next two weeks will probably total $177 billion, the largest concentration of so-called duration supply ever, JPMorgan Chase & Co., one of the 21 primary dealers that underwrite America’s borrowings, said in a report Dec. 9. This week’s sales will consist of $78 billion in notes, bonds and inflation-linked securities in four auctions starting today with $32 billion of three-year debt. The Treasury will announce on Dec. 15 how much it plans to raise in three offerings starting Dec. 19.
The dollar appreciated against most of its major peers monitored by Bloomberg, strengthening 0.2 percent versus the yen and 0.4 percent against the pound.
The Swedish krona weakened against 15 of its 16 most- actively traded counterparts, tumbling 1.4 percent versus the dollar and 0.4 percent against the euro.
European carbon prices rose from record lows after the world’s largest polluters backed away from positions that stymied global climate talks for more than a decade. EU permits for delivery this month rose as much 6.2 percent and traded at 8.10 euros on the ICE Futures Europe exchange in London.
Commodities Fall
Silver dropped 3 percent to $31.48 an ounce and natural gas fell 2.4 percent to $3.236 for a million British thermal units. Copper declined 2.1 percent and Brent crude was 1 percent lower at $107.54 a barrel.
The MSCI Emerging Markets Index (MXEF) slipped 0.3 percent, erasing earlier gains of as much as 0.9 percent. India’s Sensex Index fell 2.1 percent after industrial production fell for the first time since June 2009. The Shanghai Composite Index (SHCOMP) lost 1 percent after data showed overseas shipments rose by the least in two years. Benchmark gauges in Turkey, Poland and the Czech Republic lost more than 1 percent.
To contact the reporter on this story: Stephen Kirkland in London at skirkland@bloomberg.net Lynn Thomasson in Hong Kong at lthomasson@bloomberg.net;
To contact the editor responsible for this story: Stuart Wallace at jcarrigan@bloomberg.net
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