Dollar Strengthens as European Stocks Decline for a Seventh Day on Crisis - Bloomberg

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Dollar Strengthens as European Stocks Decline for a Seventh Day on Crisis

By Shiyin Chen - Nov 25, 2011

The dollar strengthened, U.S. equity-index (MXAP) futures retreated and European stocks slumped for a seventh day on concern euro-area leaders are struggling to contain the regions debt crisis. The dollar advanced against 15 of its 16 major peers and reached a seven-week high versus the euro as of 8:50 a.m. in London. Standard & Poors 500 futures decreased 0.7 percent, signaling the index may drop for a seventh day when U.S. markets resume trading after the Thanksgiving break. The Stoxx Europe 600 Index slipped 0.7 percent. Japans benchmark bond yields climbed above 1 percent for the first time in three weeks. Copper and soybeans paced losses among commodities. Shares sank after the Financial Times reported the European Financial Stability Facility may not be able to raise enough funds to increase its capacity because of a deterioration in market conditions over the past month. Italys two-year yields earlier jumped to a euro-era record 7.495 percent today as the nation prepared to sell bills. German Chancellor Angela Merkel yesterday ruled out joint euro-area borrowing and an expanded role for the European Central Bank in fighting the crisis. We need to see more action out of Europe before any sort of rebound happens, Nick Maroutsos, who oversees the equivalent of about $3 billion as co-founder of Sydney-based Kapstream Capital, said in a Bloomberg Television interview. Greece, Ireland, Portugal are becoming after-thoughts as the crisis is now unfolding at the footsteps of Italy, France and Germany. These are the larger countries and these would have the largest knock-on effects.

No Longer Immune
The dollar rallied 0.5 percent to $1.3286 per euro. Joint euro bonds would immediately lead to a convergence of interest rates in the region, Merkel said yesterday at a press conference with Italian Prime Minister Mario Monti and French President Nicolas Sarkozy in Strasbourg, France. Hungary lost its investment-grade rating at Moodys Investors Service.

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Dollar Strengthens as European Stocks Decline for a Seventh Day on Crisis - Bloomberg

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We are likely to see investors continue to exercise caution in the market, said Stan Shamu, a strategist at IG Markets in Melbourne. Theres a feeling Germany is no longer immune to this whole situation and they may act further, which is obviously why everyone is calling for common euro bonds. S&P 500 futures expiring in December signal U.S. stocks may extend a six-day, 7.6 percent slump that dragged the benchmark index down to the lowest level since Oct. 7. Trading will end at 1 p.m. today. Treasury 10-year notes fell for the first time this week, sending yields four basis points higher to 1.93 percent. Japans Outlook Japans 10-year yields increased three basis points to 1.025 percent after Standard & Poors said yesterday Prime Minister Yoshihiko Nodas administration hasnt made progress in tackling the nations public debt burden. Twenty-year yields climbed 5.5 basis points to 1.785 percent, the highest rate since Nov. 2, while 30-year yields added five basis points to 1.96 percent. The yen slid 0.4 percent to 77.41 per dollar. Japanese Finance Minister Jun Azumi said today hes cautiously watching the foreign-exchange market and is prepared to act should he see moves driven by speculation. Consumer prices fell for the first time in four months, data showed today. The Stoxx 600 was headed for a 6 percent weekly loss. The MSCI Asia Pacific Index retreated 1 percent, poised for the lowest close since Oct. 5. Australias S&P/ASX 200 Index fell 1.5 percent, South Koreas Kospi index declined 1 percent and Japans Nikkei 225 Stock Average slid 0.1 percent to close at the lowest level since March 2009.

Woodside, HTC
Woodside Petroleum Ltd. (WPL) dropped 5.8 percent in Sydney after the oil and gas producer predicted a smaller-than-expected increase in output for 2012. HTC Corp. (2498), the smartphone maker that this week cut revenue forecasts, plunged 6.9 percent after Citigroup Inc. and Barclays Plc cut their ratings on the stock. Taiwans Taiex index (TWSE) fell 1.2 percent, after earlier gaining as much as 1.3 percent. The islands Financial Supervisory Commission called insurers to remind them that lending securities to short sellers may result in the reduction of value of their own stocks, said Lee Jih-Chu, a spokesman for the regulator. It didnt ask insurers to stop lending, she said. Three-month copper retreated 0.8 percent to $7,204.50 a metric ton in London. Futures were set for a fourth weekly loss. Soybean futures dropped as much as 1.3 percent to $11.0825 a bushel, the

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lowest level since October 2010. Wheat slipped 0.9 percent to $5.89 a bushel, near the lowest since July 2010. Brent oil declined 0.1 percent to $107.62 a barrel, wiping out most of its gains for the week. Losses today were capped by concern violence in Saudi Arabia may destabilize the worlds biggest oil exporter. West Texas crude traded at $95.99 a barrel in New York, compared with the settlement price of $96.17 on Nov. 23. The January contract has dropped 1.7 percent this week. To contact the reporter on this story: Shiyin Chen in Singapore at schen37@bloomberg.net To contact the editor responsible for this story: James Regan at jregan19@bloomberg.net.
2011 BLOOMBERG L.P. ALL RIGHTS RESERVED.

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