By Rita Nazareth and Michael P. Regan - Dec 13, 2011 11:16 PM GMT+0700
U.S. stocks trimmed early gains and the euro slid to the lowest level versus the dollar since January amid concern Europe’s leaders won’t agree on ways to expand the region’s rescue fund.
The Standard & Poor’s 500 Index rose 0.1 percent to 1,238.22 at 11:13 a.m. in New York after climbing as much as 1.1 percent. The euro weakened as much as 1 percent to $1.3057 as it fell against 13 of 16 major peers. Oil climbed 2.1 percent to $99.82 after rallying as much as 3.6 percent following a report that Iran will hold drills to close the Strait of Hormuz.
Stocks and the euro turned lower as Reuters reported that German Chancellor Angela Merkel has rejected raising the upper limit of funding for the European Stability Mechanism, the region’s permanent bailout fund. Earlier gains in equities came after German investor confidence improved, Spain sold more debt than planned at an auction and investors awaited a statement from the Federal Reserve on interest rates and the economy.
“The Fed is going to say the economy is in relatively sluggish state and that they stand ready to do whatever is needed in order to make sure that we don’t fall back into recession,” Michael Mullaney, who helps manage $9.5 billion at Fiduciary Trust in Boston, said in a telephone interview. “The only thing that’s holding back the market is obviously the daily news coming out of Europe.”
A gauge of energy producers led gains among the main industry group sin the S&P 500, rising more than 0.9 percent after surging as much as 2.2 percent. Marathon Oil Corp. and Murphy Oil Corp. climbed at least 1.9 percent to lead an advance in 27 of 42 energy companies in the S&P 500.
Retailers Slip
Retailers fell 1.4 percent as a group, the worst performance among 24 industries in the S&P 500, after the government reported that retail sales rose in November at the slowest pace in five months. The 0.2 percent gain followed a 0.6 percent advance in October that was more than initially reported, Commerce Department figures showed. Economists projected a 0.6 percent November increase, according to the median forecast in a Bloomberg News survey.
The Fed may keep its target rate in a range of zero to 0.25 percent at a policy meeting today, a Bloomberg survey showed. The Fed will probably revise its pledge to keep interest rates close to zero through mid-2013 as the need for large scale asset purchases diminishes, according to economists in a Bloomberg News survey.
The Fed will alter the interest rate commitment before June, according to 64 percent of economists surveyed, with 51 percent saying the central bank will abandon the option of a third round of buying bonds, or so-called QE3.
Crude Trims Gain
Crude pared gains after an Iranian Foreign Ministry spokesman said the Strait of Hormuz isn’t closed. The comments on the strait were made by people who don’t have an official title, said Ramin Mehmanparast, the spokesman.
The Stoxx Europe 600 Index erased most of an earlier 1.2 percent gain
The ZEW Center for European Economic Research said its index of German investor and analyst expectations unexpectedly rose for the first time in 10 months, rebounding from a three- year low. The ZEW confidence index increased to minus 53.8 in December from a three-year low of minus 55.2 the previous month. The gauge was forecast to drop to minus 55.8, according to the median of 34 estimates in Bloomberg survey of economists. Its index of current conditions fell to 26.8 from 34.2 in November, compared with a reading of 31 in a Bloomberg survey.
To contact the reporters on this story: Rita Nazareth in Sao Paulo at rnazareth@bloomberg.net; Michael P. Regan in New York at mregan12@bloomberg.net
To contact the editor responsible for this story: Nick Baker at nbaker7@bloomberg.net
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