The Doomed Euro-euro stocks, decline on Debt Concern as Italy Bond Yields Climb
Stocks and the euro declined as Italy’s borrowing costs increased to a euro-era record at an auction today, deepening concern Europe will struggle to contain its debt crisis. German bunds rose, while copper climbed as Japan’s economy grew for the first time in a year.
As the EU and its euro crashes into massive debt its very unlikely the EU can recover, well not within the next 20 years or more, Ireland legacy to its children’s children is like a ball and chain of debt as like Greece. Spain and Italy, and this what earlier half-wit and liar Tony Blair said he would like to see England become a part of? Just as well the man did a runner, as the worst thing that could happened is if the lying cheat had stayed in British politics, then David Cameron would have two snake to deal with one small one like an adder Nick Clegg with behind your back venomous bite but Tony Blair would be like Boa-constrictor? And crush the life out of England and its people.
The Standard & Poor’s 500 Index lost 0.4 per cent to 1,258.61 at 10:15 a.m. in New York after rallying 2.8 per cent in the previous two sessions. The Stoxx Europe 600 Index dropped 1 per cent as UniCredit SpA slid on plans to sell shares. Japan’s Nikkei 225 Stock Average climbed 1.1 per cent. The euro weakened 0.9 per cent to $1.3629. The yield on the Italian five-year bond rose 20 basis points, with the 10-year benchmark German bund yield eight basis points lower.
Italy sold 3 billion euros ($4.1 billion) of five-year notes priced to yield 6.29 per cent, the highest since June 1997. German Chancellor Angela Merkel called for an overhaul of the European Union, advocating closer political ties and tighter budget rules, speaking at her political party’s annual conference. Japan’s gross domestic product grew an annualized 6 per cent in the last quarter as exports recovered from the record earthquake on March 11, government data showed.
“These blip-ups in yields put more uncertainty in the market,” Peter Tuz, who helps manage about $800 million as president of Chase Investment Counsel Corp. in Charlottesville, Virginia, said in a telephone interview. “Stabilization on that front would be really important. Just because they’ve had a bit of good news coming out of Europe last week, it doesn’t mean they don’t still have a lot of work to do to get their financial houses in order.”
The S&P 500 advanced 0.9 per cent last week, bringing the gauge to a 0.5 per cent gain this year as of Nov. 11. Losses today were led by financial companies, with JPMorgan Chase & Co. falling 1.8 per cent and Citigroup Inc. down 2.7 per cent.
Boeing Co. rose 2.4 per cent today after the plane maker secured the biggest order in its almost 100-year history, signing a $26 billion agreement with Emirates airline for as many as 70 of its 777 aircraft. International Business Machines Corp. climbed 0.9 per cent after Warren Buffett told CNBC that his Berkshire Hathaway Inc. acquired a 5.5 per cent stake in the world’s biggest computer-services provider.
Four shares fell for every one that gained in the Stoxx 600. Hochtief AG sank 10 per cent after Germany’s largest construction company delayed the sale of its airport operating business and reported third-quarter earnings that missed estimates.
UniCredit, Italy’s biggest bank, slid 5.4 per cent after announcing plans to raise as much as 7.5 billion euros ($10.3 billion) by selling new shares to boost capital. The bank reported a 10.6 billion-euro loss for the third quarter after almost 10 billion euros in goodwill impairments and write-downs, and said it won’t pay a dividend for 2011.
The yield on Italy’s 10-year bond increased 25 basis points to 6.70 per cent, compared with a euro-era record last week of 7.48 per cent. Demand at today’s auction was 1.47 times the amount on offer, compared with 1.34 times last month, when the yield was 5.32 per cent. Former European Union Competition Commissioner Mario Monti was asked yesterday to set up a government faced with trying to cut the euro region’s second- biggest debt.
There was “decent bidding” at today’s auction, Annalisa Piazza, an economist at Newedge Group in Italy, said in a report. “Dealers remain cautious. Credibility has been lost and it will take a while for market participants to believe that the country is back on the right track.”
The 10-year French yield increased six basis points to 3.45 per cent, reversing earlier declines, while the Spanish yield increased 24 basis points to 6.09 per cent. The Greek two-year note yield surged 69 basis points, or 0.69 percentage point, to 109.59 per cent.
The euro weakened 1 per cent against the yen. The pound dropped 0.9 per cent versus the dollar after an index of U.K. employers’ hiring intentions weakened as the crisis in the euro region damped demand for labour, data from the Chartered Institute of Personnel and Development showed. The dollar gained against 12 of its 16 major counterparts.
The MSCI Emerging Markets Index climbed 0.6 per cent. South Korea’s Kospi Index and Taiwan’s Taiex Index rose more than 2 per cent. The Hang Seng China Enterprises Index in Hong Kong jumped 2.8 per cent. Hungary’s forint sank 1.6 per cent against the euro and the BUX Index of stocks lost 2.9 per cent after S&P said it may cut the country’s debt rating to speculative grade.
Oil in New York fell 1.5 per cent to $97.51 a barrel, while lead and zinc jumped more than 1 per cent.