The euro fell and European government bonds rose after the region’s economy shrank the most in 13 years, increasing investor concern the pace of recovery from the first global recession since World War II is flagging.
The euro weakened 1.2 percent against the yen and 0.5 percent versus the dollar at 9:45 a.m. in London, while the yield on the 10-year German bund dropped three basis points. The MSCI World Index of stocks climbed 0.6 percent, trimming its first weekly drop in two months, as Barclays Plc led a rally in financial shares. Futures on the Standard & Poor’s 500 Index advanced 0.2 percent.
“Almost without exception, the markets seem to be suggesting a real danger that we are about to see a six- to eight-week period that is very risk-negative,” Citigroup Inc. currency strategists Tom Fitzpatrick in New York and London- based Shyam Devani wrote in a note to clients.
The euro is having its worst week against the yen in four months as concern grows that the slump in the 16-nation region is deepening and European Central Bank policy makers differ over the measures needed to spark a recovery. ECB Vice President Lucas Papademos said yesterday the rebound may come sooner than previously thought, while Dutch council member Nout Wellink said economists shouldn’t get too optimistic.
Gross domestic product in the 16-member euro region dropped 2.5 percent from the fourth quarter, the European Union’s statistics office in Luxembourg said today. That’s the biggest drop since the euro-area GDP data were first compiled in 1995 and exceeded the 2 percent decline economists forecast in a Bloomberg News survey.
Dollar Advances
The dollar had its biggest gain against the euro in almost two weeks, strengthening to $1.3575, before reports today that may show U.S. industrial production declined in April at the slowest pace in six months and consumer sentiment climbed to the highest level since September.
New Zealand’s dollar fell 1.6 percent versus the yen and 1.1 percent against the dollar after the nation’s statistics office said retail sales declined for a record sixth quarter.
“The New Zealand dollar is an accident waiting to happen,” Greg Gibbs, a currency strategist at Royal Bank of Scotland Group Plc in Sydney, wrote in a report today.
Russia’s ruble strengthened for a 12th week against a basket of currencies, the longest stretch since 2005. The currency, which is managed against the basket to limit swings that hurt exporters, appreciated 0.2 percent to 37.3043, bringing its five-day advance to 0.6 percent.
Emerging Markets
Emerging-market stocks climbed, trimming the first weekly drop in two months, after the U.S. government’s bailout of insurers bolstered confidence in financial companies. The MSCI Emerging Markets Index gained 1.1 percent as Industrial & Commercial Bank of China Ltd., the world’s largest bank by market value, and OAO Sberbank, Russia’s biggest lender, rose.
The Dow Jones Stoxx 600 Index of European shares climbed 0.6 percent, reducing its weekly decline to 3.1 percent. London- based Barclays rose 8.5 percent to 274.5 pence after people with knowledge of the matter said the U.K.’s third-biggest bank is in talks to sell Barclays Global Investors.
Hartford Financial Services Group Inc. rose 10 percent to $16.24 in German trading. The Hartford, Connecticut-based company was among six insurers granted access to U.S. aid as the government moves to shore up an industry battered by investment losses.
Copper fell 0.2 percent to $4,438 a metric ton on the London Metal Exchange, heading for its first weekly drop in three. Crude oil rose 0.2 percent to $58.71 a barrel on the New York Mercantile Exchange, having retreated from a six-month high of $60 a barrel this week.
“This bear market rally will end soon,” said Charles Morris, head of absolute return at HSBC Global Asset Management, which manages $2 billion of assets in London. “I’d stick to high-quality investment: gold and good stocks.”
The euro weakened 1.2 percent against the yen and 0.5 percent versus the dollar at 9:45 a.m. in London, while the yield on the 10-year German bund dropped three basis points. The MSCI World Index of stocks climbed 0.6 percent, trimming its first weekly drop in two months, as Barclays Plc led a rally in financial shares. Futures on the Standard & Poor’s 500 Index advanced 0.2 percent.
“Almost without exception, the markets seem to be suggesting a real danger that we are about to see a six- to eight-week period that is very risk-negative,” Citigroup Inc. currency strategists Tom Fitzpatrick in New York and London- based Shyam Devani wrote in a note to clients.
The euro is having its worst week against the yen in four months as concern grows that the slump in the 16-nation region is deepening and European Central Bank policy makers differ over the measures needed to spark a recovery. ECB Vice President Lucas Papademos said yesterday the rebound may come sooner than previously thought, while Dutch council member Nout Wellink said economists shouldn’t get too optimistic.
Gross domestic product in the 16-member euro region dropped 2.5 percent from the fourth quarter, the European Union’s statistics office in Luxembourg said today. That’s the biggest drop since the euro-area GDP data were first compiled in 1995 and exceeded the 2 percent decline economists forecast in a Bloomberg News survey.
Dollar Advances
The dollar had its biggest gain against the euro in almost two weeks, strengthening to $1.3575, before reports today that may show U.S. industrial production declined in April at the slowest pace in six months and consumer sentiment climbed to the highest level since September.
New Zealand’s dollar fell 1.6 percent versus the yen and 1.1 percent against the dollar after the nation’s statistics office said retail sales declined for a record sixth quarter.
“The New Zealand dollar is an accident waiting to happen,” Greg Gibbs, a currency strategist at Royal Bank of Scotland Group Plc in Sydney, wrote in a report today.
Russia’s ruble strengthened for a 12th week against a basket of currencies, the longest stretch since 2005. The currency, which is managed against the basket to limit swings that hurt exporters, appreciated 0.2 percent to 37.3043, bringing its five-day advance to 0.6 percent.
Emerging Markets
Emerging-market stocks climbed, trimming the first weekly drop in two months, after the U.S. government’s bailout of insurers bolstered confidence in financial companies. The MSCI Emerging Markets Index gained 1.1 percent as Industrial & Commercial Bank of China Ltd., the world’s largest bank by market value, and OAO Sberbank, Russia’s biggest lender, rose.
The Dow Jones Stoxx 600 Index of European shares climbed 0.6 percent, reducing its weekly decline to 3.1 percent. London- based Barclays rose 8.5 percent to 274.5 pence after people with knowledge of the matter said the U.K.’s third-biggest bank is in talks to sell Barclays Global Investors.
Hartford Financial Services Group Inc. rose 10 percent to $16.24 in German trading. The Hartford, Connecticut-based company was among six insurers granted access to U.S. aid as the government moves to shore up an industry battered by investment losses.
Copper fell 0.2 percent to $4,438 a metric ton on the London Metal Exchange, heading for its first weekly drop in three. Crude oil rose 0.2 percent to $58.71 a barrel on the New York Mercantile Exchange, having retreated from a six-month high of $60 a barrel this week.
“This bear market rally will end soon,” said Charles Morris, head of absolute return at HSBC Global Asset Management, which manages $2 billion of assets in London. “I’d stick to high-quality investment: gold and good stocks.”
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