By Paul Armstrong and Lynn Thomasson - Apr 11, 2012 6:00 PM GMT+0700
European stocks rebounded from a two-month low and U.S. equity futures gained after Alcoa Inc. opened the earnings season with an unexpected profit. Spanish and Italian bonds climbed as governments sell about $50 billion of debt and the euro strengthened.
The Stoxx Europe 600 Index (SXXP) rose 0.9 percent as of 11:57 a.m. in London, while Standard & Poor’s 500 Index futures advanced 0.8 percent, signaling that stocks may gain for the first time in six days. Alcoa rose 6.3 percent in pre-market New York trading as aluminum climbed 0.9 percent from a three-month low. The euro snapped a five-day drop against the yen to strengthen 0.7 percent and Spanish debt risk neared a record.
Prime Minister Mariano Rajoy said Spain’s future is at stake in its battle to tame surging bond yields. Photographer: Jock Fistick/Bloomberg
April 11 (Bloomberg) -- Timothy Moe, a Hong Kong-based strategist at Goldman Sachs Group Inc., talks about the outlook for Asia stocks Stocks in Asia slipped, with the region’s benchmark index falling for a sixth day, as Spanish bond yields surged closer to levels that prompted Greece, Ireland and Portugal to seek European bailouts. Moe speaks with Susan Li on Bloomberg Television's "First Up." (Source: Bloomberg)
April 11 (Bloomberg) -- Peter Garnry, an equity strategist at Saxo Bank A/S, discusses Alcoa Inc.'s unexpected first-quarter profit reported yesterday, investment strategy for European equities and recommendation of Rolls-Royce Holdings Plc. He speaks from Hellerup, Denmark, with Caroline Hyde on Bloomberg Television's "Countdown." (Source: Bloomberg)
April 11 (Bloomberg) -- Pelham Smithers, managing director of Pelham Smithers Associates, talks about the outlook for Sony Corp. and Sharp Corp. Sony and Sharp posted losses that together equaled 900 billion-yen ($11 billion) as the first decline in global TV shipments in six years and a stronger yen hurt overseas sales for Japan’s biggest LCD TV makers. Smithers speaks with Susan Li on Bloomberg Television's "First Up." (Source: Bloomberg)
Australian one-dollar coins sit with a collection of bank notes arranged for a photograph, in Sydney, Australia. Photographer: Sergio Dionisio/Bloomberg
Pedestrians are reflected in an electronic stock board outside a securities firm in Tokyo, Japan. Photographer: Haruyoshi Yamaguchi/Bloomberg
European Central Bank Executive Board member Benoit Coeure suggested the lender could revive its debt-purchase program to reduce Spain’s borrowing costs after 10-year yields approached 6 percent. Italy and Germany were among six countries in Europe that sold debt today, while in the U.S., the Federal Reserve will release its Beige Book business survey. Alcoa (AA), the country’s largest aluminum producer, reported an unexpected first-quarter profit after orders rose.
“Fundamentally, the equity market offers extreme value and I am very happy to be buying on the dips,” said George Godber, who helps oversee $22 billion as a fund manager at Charles Stanley’s Matterley division in London. His Matterley Undervalued Assets Fund gained 12 percent in 2012. “Equities are the only place to be.”
UniCredit, Sanpaolo
UniCredit SpA (UCG) and Intesa Sanpaolo SpA, Italy’s biggest banks, led a rebound in financial shares, advancing 5.7 percent and 5.6 percent. CGGVeritas SA (GA), the world’s largest seismic surveyor of oil fields, climbed 5.5 percent after saying it boosted vessel production in the first quarter. Givaudan SA, a Swiss maker of flavors and fragrances, gained 3 percent as sales increased.
Germany’s 10-year bund fell, with the yield rising six basis points to 1.79 percent, after an auction of 10-year benchmark notes failed to attract bids for the maximum amount that the nation planned to sell.
The 10-year Italian bond yield fell 15 basis points to 5.54 percent after the government sold debt, while the 10-year Spanish bond yield declined nine basis points to 5.89 percent. The euro strengthened to 106.31 yen and gained 0.5 percent to $1.3150.
The yield on the 10-year U.K. gilt increased five basis points to 2.05 percent after its debt agency sold 4.5 billion pounds ($7.2 billion) of September 2017 securities. The yield on the 10-year U.S. Treasury advanced four basis points to 2.02 percent, snapping five days of declines, before the government auctions $21 billion of the debt.
Spanish Risk
The cost of insuring against a default on Spanish government bonds approached the highest ever, with credit- default swaps on the nation climbing 10.5 basis points to 490.5, compared with a record 493 set on Nov. 23.
European corporate bond risk fell from a 2 1/2-month high, with the Markit iTraxx Crossover Index of default swaps on 50 mostly junk-rated European companies declining 17.5 basis points to 682.5. That’s the index’s first decline since April 2 and signals an improvement in perceptions of creditworthiness.
“Markets do feel primed for a mini-correction,” said Harpreet Parhar, a strategist at Credit Agricole SA in London. “There could be an overly great focus on the Italian auction as we search for direction.”
Aluminum Gains
Aluminum gained to $2,082 a metric ton. Brent crude oil added 0.1 percent to $120.04 a barrel after two days of declines. Copper for delivery in three months increased 0.6 percent to $8,078 a ton on the London Metal Exchange and gold dropped 0.3 percent to $1,655.40 an ounce, the first decline in five days.
The MSCI Emerging Markets Index (MXEF) dropped 0.2 percent, heading for its sixth day of declines and its lowest level since Jan. 30.
The Hang Seng China Enterprises Index (HSCEI) fell 1 percent, its third straight decline. The Shanghai Composite Index (SHCOMP) gained 0.1 percent. Chongqing Brewery Co. and Chongqing Road & Bridge Co. (600106) dropped at least 0.4 percent after the official Xinhua News Agency said Bo Xilai was removed from the Politburo.
The ISE National 100 Index (XU100) slid 0.7 percent in Turkey and the FTSE/JSE Africa All Shares Index (JALSH) slipped 0.2 percent in Johannesburg. The Micex Index (MICEX) gained 0.5 percent in Moscow.
To contact the reporters on this story: Paul Armstrong in London at parmstrong10@bloomberg.net; Lynn Thomasson in Hong Kong at lthomasson@bloomberg.net
To contact the editor responsible for this story: Stuart Wallace at swallace6@bloomberg.net
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