By Andrew Rummer - Feb 10, 2012 9:31 PM GMT+0700
Feb. 10 (Bloomberg) -- European finance ministers held back a rescue package for Greece in a rebuff that left lawmakers in Athens under government pressure to endorse a newly minted austerity plan or exit the euro. Owen Thomas, Linzie Janis and David Tweed report on Bloomberg Television's "Countdown." (Source: Bloomberg)
Feb. 10 (Bloomberg) -- Catherine Yeung, an investment director at Fidelity Investment Management Ltd. in Hong Kong, talks about Asian stocks and bonds. Yeung also discusses China's economy and central bank monetary policy. She speaks with Susan Li on Bloomberg Television's "First Up." (Source: Bloomberg)
Feb. 10 (Bloomberg) -- Nick Sargen, chief investment officer at Fort Washington Investment Advisors in Cincinnati, talks about the outlook for bond and stock markets and his investment strategy. Sargen also discusses the euro members' efforts to resolve Greece's debt problems. He speaks with Susan Li on Bloomberg Television's "First Up." (Source: Bloomberg)
Global stocks fell for the first time in four days, commodities slid and the euro weakened amid concern that plans to help Greece avoid default were unraveling. U.S. Treasuries and costs to protect European debt rose.
The MSCI All-Country World Index lost 1.1 percent at 9:30 a.m. in New York and the Standard & Poor’s 500 Index slipped 0.6 percent. The S&P GSCI gauge of commodities dropped 1.3 percent. The euro slipped 0.8 percent to $1.3180 after touching a two- month high yesterday. The yield on the 10-year U.S. Treasury note fell six basis points to 1.98 percent, while Spain’s 10- year yield rose 20 basis points to 5.37 percent. The Markit iTraxx SovX Western Europe Index of credit-default swaps on 15 governments climbed 8 basis points to 330.
Greece must pass its latest austerity package into law and identify 325 million euros ($431 million) in spending cuts before euro-area governments endorse a second bailout for the country, Luxembourg Prime Minister Jean-Claude Juncker said. Laos Party leader George Karatzaferis said the roadmap proposed for Greece is wrong and he can’t vote for the accord as is. China’s exports fell for the first time in more than two years in January, the customs bureau reported.
“For many days and weeks, we’ve been hearing that negotiations soon will be over,” said Yves Maillot, the head of investments at Robeco Gestions in Paris, who helps oversee $6.8 billion. “Things are getting stuck a bit on every front. The big European countries must dig into their budgets to help Greece.”
Euro Exit
Greek Finance Minister Evangelos Venizelos pressed domestic political leaders to yield to conditions for a bailout, saying a refusal would open the way for the country’s exit from the euro.
Euro-area finance ministers refused to approve a second aid package at an emergency meeting because the government fell short of austerity demands and because of a lack of assurances by Greek party leaders that they will stick to their commitments after elections due as soon as April. The Greek parliament is due to vote on the measures this weekend. Euro-region ministers are set to meet again on Feb. 15.
German Finance Minister Wolfgang Schaeuble told lawmakers in Berlin today that Greece is missing its debt-cutting targets, according to two people who took part in the meeting.
Schaeuble, briefing lawmakers on estimates by the so-called troika assessing Greek progress, said that Greece’s pledges would leave debt at as much as 136 percent of gross domestic product by 2020, the people said. The target was to reduce debt to 120 percent of GDP by then.
‘Blind to Risks’
“Markets have been a little blind to the risks still remaining in the system,” Philippe Gijsels, head of research at BNP Paribas Fortis Global Markets, said in a phone interview from Brussels. “The Greece solution has been promised for a while, but they cannot get their bits together.”
The Stoxx Europe 600 Index declined 1 percent today, extending this week’s drop to 1.3 percent. Cable & Wireless Communications Plc slid 15 percent in London as the company cut guidance for its Panama and Caribbean units. SSAB, a Swedish steelmaker, sank 6.8 percent after reporting a loss. Alcatel- Lucent, France’s largest telecommunications-equipment supplier, surged 14 percent after forecasting higher profit margins.
Today’s drop threatened to erase a 0.5 percent advance in the S&P 500 over the previous four days and snap a streak of five straight weekly gains. Citigroup Inc., Morgan Stanley and Bank of America Corp. paced losses in banks. LinkedIn Corp., the biggest professional-networking website, rose after reporting quarterly sales that more than doubled and forecast increased 2012 revenue.
Consumer Confidence
A report today may show confidence among U.S. consumers declined in February. The Thomson Reuters/University of Michigan preliminary index of consumer sentiment slipped to 74.8 from 75 in January, according to a Bloomberg survey of economists. The U.S. trade deficit widened 3.7 percent in December to $48.8 billion, government data showed.
Federal Reserve Chairman Ben S. Bernanke is due to speak on “housing markets in transition” in Orlando, Florida.
Copper dropped 2.3 percent to $8,554.75 a metric ton in London. China is the biggest buyer of the metal. Gold declined 0.9 percent to $1,713.38 an ounce, the third consecutive drop. Brent crude was down 1.7 percent to $116.60 a barrel, ending the longest winning streak for the March futures contract since October 2009. West Texas crude traded in New York slid 2.1 percent to $97.78.
German 10-year bonds rose for the first time in four days, driving the yield down eight basis points to 1.94 percent. The extra yield investors demand to hold similar-maturity Spanish debt instead of bunds increased 27 basis points to 3.44 percentage points, while Greek securities due in October 2022 dropped, sending the yield 26 basis points higher to 31.311 percent.
Euro, Aussie Weaken
The 17-nation euro depreciated 0.8 percent versus the yen. The Australian dollar dropped 1.1 percent against its U.S. counterpart after the Reserve Bank of Australia cut its forecasts for growth and inflation this year, boosting scope for policy makers to reduce interest rates.
Bank bond risk climbed in Europe, with the Markit iTraxx Financial Index of credit-default swaps linked to the senior debt of 25 lenders and insurers rising 10 basis points to 216.
The MSCI Emerging Markets Index (MXEF) slid 1.8 percent, the most this year. The Hang Seng China Enterprises Index (HSCEI) sank 2.3 percent as the nation’s customs bureau said exports fell and imports slid more than forecast in January, the first declines in two years, after a weeklong holiday disrupted trade and commodity prices dropped. Benchmark gauges in South Korea, Indonesia and Hungary fell more than 1 percent.
To contact the reporter on this story: Andrew Rummer in London at arummer@bloomberg.net
To contact the editor responsible for this story: Chris Nagi at chrisnagi@bloomberg.net
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