By Stephen Kirkland and Lynn Thomasson - Jan 9, 2012 7:19 PM GMT+0700
The euro rebounded from the lowest level against the dollar since September 2010 as leaders began discussing plans to shore up the currency. European stocks fell, U.S. index futures were little changed and Chinese shares rose.
The euro appreciated 0.4 percent to $1.2762 at 7:15 a.m. in New York, snapping a three-day decline. The German 10-year bund yield increased three basis points. The Stoxx Europe 600 Index dropped 0.2 percent, and Standard & Poor’s 500 Index futures swung between gains and losses. The Shanghai Composite Index advanced 2.9 percent, and Hungary’s BUX Index rose 1.9 percent. Wheat jumped 1.7 percent, and oil slid 0.5 percent in New York.
German Chancellor Angela Merkel and French President Nicolas Sarkozy are meeting in Berlin to consider measures designed to rescue the euro over the next three months. A round of talks among euro-area leaders will follow before the next summit in Brussels on Jan. 30. Alcoa Inc. is due to release fourth-quarter results after the market closes today, unofficially starting the U.S. earnings season.
“It looks like it’s a bit of a relief rally,” said Chris Walker, a currency strategist at UBS AG in London. “The euro’s picked up as traders don’t want to be caught short ahead of the Sarkozy-Merkel meeting. We’re not looking for any new policy to be announced today, but there’s still some headline risk.”
The euro climbed 0.2 percent versus the yen, after sliding to the lowest since December 2000. The Dollar Index (DXY), which tracks the U.S. currency against those of six trading partners, slipped 0.3 percent, falling for the first time in four days.
Greek Bonds
The yield on the Greek two-year note fell 307 basis points to 132.44 percent, with the price rising to about 28 percent of face value. The Spanish 10-year yield declined 16 basis points, narrowing the difference with bunds by 18 basis points, while the Portuguese-German 10-year spread fell three basis points.
The cost of insuring against default on European sovereign debt rose to a record, with the Markit iTraxx SovX Western Europe Index of credit-default swaps on 15 governments climbing as much as four basis points to 386, before trading little changed.
The yield on the 10-year Treasury note (USGG10YR) rose one basis point to 1.97 percent. The government will sell $32 billion of three- year notes tomorrow, $21 billion of 10-year debt the following day, and $13 billion of 30-year bonds on Jan. 12.
GlaxoSmithKline Plc (GSK) lost 2.5 percent, the most in two months, after the U.K.’s biggest drugmaker said it will hold further talks with U.S. regulators on requirements for a filing for the experimental drug Relovair for use against asthma.
UniCredit SpA, Italy’s largest lender, tumbled 11 percent as rights to buy its shares slumped in their first day of trading in Milan.
U.S. Earnings
Alcoa gained 1 percent in German trading. The biggest U.S. aluminum producer may say it lost 1 cent a share in the fourth quarter, according to the average of 18 estimates in a Bloomberg survey of analysts. Companies in the S&P 500 may report earnings grew 6 percent in the quarter from a year earlier, the smallest quarterly gain since September 2009, according to projections compiled by Bloomberg as of Jan. 6.
The MSCI Emerging Markets Index (MXEF) added 0.4 percent. Chinese stocks gained the most in almost three months after the central bank reported lending and money supply growth that exceeded economists’ estimates in December. Hungarian shares rose for the first time in five days after Prime Minister Viktor Orban told state news service MTI yesterday his government was open to “any kind” of credit line with the International Monetary Fund.
The BSE India Sensitive Index slipped 0.2 percent after Prime Minister Manmohan Singh said the economy will have grown about 7 percent in the year to March 31, less than a December forecast of 7.5 percent.
Wheat jumped to $6.35 a bushel, the first increase in four days. Silver gained 0.4 percent and corn and soybeans advanced more than 0.9 percent. Oil in New York fell to $101.05 a barrel.
To contact the reporters 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: Justin Carrigan at jcarrigan@bloomberg.net
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