*Euro, Stocks, Commodities Retreat as Bailout Optimism Ebbs * May 11 (Bloomberg) -- The euro halted a two-day gain and stocks fell, with Chinese equities entering a bear market, amid concern Europe’s indebted nations will struggle to cut deficits even after an almost $1 trillion emergency loan package.
The euro weakened 0.5 percent against the dollar at 10:13 a.m. in New York and the Stoxx Europe 600 Index fell 1.6 percent after rising 7.2 percent yesterday, its biggest gain since November 2008. The Standard & Poor’s 500 Index dropped 0.6 percent. Copper, zinc, aluminum and led fell more than 1.5 percent to lead commodities lower. Oil rose. The European Union’s unprecedented bailout package is unlikely to be a “long-term solution” for the region, *Marek Belka*<http://search.bloomberg.com/search?q=Marek%0ABelka&site=wnews&client=wnews&proxystylesheet=wnews&output=xml_no_dtd&ie=UTF-8&oe=UTF-8&filter=p&getfields=wnnis&sort=date:D:S:d1>, the director of the International Monetary Fund’s European department, said in Brussels yesterday. Inflation in China accelerated to an 18-month high, the nation’s statistics bureau said today, increasing pressure on the government to raise interest rates in an economy that has been an engine of growth through the global financial crisis. “I understand the concerns around what’s going on in Europe, and it’s going to have a dampening effect on economic activity for sure,” *Kevin Rendino*<http://search.bloomberg.com/search?q=Kevin+Rendino&site=wnews&client=wnews&proxystylesheet=wnews&output=xml_no_dtd&ie=UTF-8&oe=UTF-8&filter=p&getfields=wnnis&sort=date:D:S:d1>, who manages $11 billion in Plainsboro, New Jersey, for BlackRock Inc., said in an interview on Bloomberg Television. “But we still see the glass half- filled.” Rally Trimmed The S&P 500 erased less than one-eighth of yesterday’s 4.4 percent rally, which was the biggest advance since March 2009. The benchmark gauge for U.S. equities is down 5.3 percent from its 2010 high on April 23. Alcoa Inc., Merck & Co. and Intel Corp. lost more than 1.3 percent to lead declines in the Dow Jones Industrial Average after the 30-stock measure rallied 405 points yesterday. U.S. Treasuries were little changed after a two-day decline, with the 10-year yield at 3.54 percent and the two-year yield dropping 1 basis points to 0.85 percent. German 10-year bund yields fell 2 basis points to 2.93 percent, while two-year yields were also 3 basis points lower, at 0.57 percent. The euro fell against 10 of its 16 most-traded peers, dropping as low as $1.2667, compared with the $1.2755 level at which it closed last week. The yen strengthened against all 16 of its major counterparts as investors sought the relative safety of the Japanese currency. The dollar advanced versus 13. ‘Euphoria’ Gone “The euphoria of 24 hours ago has passed,” *Derek Halpenny*<http://search.bloomberg.com/search?q=Derek%0AHalpenny&site=wnews&client=wnews&proxystylesheet=wnews&output=xml_no_dtd&ie=UTF-8&oe=UTF-8&filter=p&getfields=wnnis&sort=date:D:S:d1>, European head of global currency research at Bank of Tokyo Mitsubishi UFJ Ltd. in London, wrote in a report today. “We are in little doubt that steps taken will offer the euro little support and the aid package does not change the fact that Spain and Portugal in particular will still have to undergo further painful austerity measures.” Traders are betting the plan to rescue debt-laden governments from Greece to Portugal will fail to reverse the euro’s worst start to a year since 2000, forcing the European Central Bank to keep interest rates at a record low for longer. Economic growth in the nations that share the euro will lag behind the U.S. by almost 1.5 percentage points next year, Bloomberg surveys of economists show. The euro has lost more than 11 percent versus the dollar so far in 2010. Credit default swaps on Greece dropped 19.5 basis points to 565, after tumbling 329.5 basis points yesterday, the biggest decline since March 2005, according to CMA DataVision. The swaps are still up from 364 on April 12. The yield on the two-year Greek note fell 65 basis points to 6.89 percent, extending yesterday’s more than 1,000 basis-point decline. Libor Gains The rate banks pay for three-month dollar loans held near the highest level in about nine months as Europe’s loan plan failed to encourage institutions to lend more to each other. The London interbank offered rate, or Libor, rose to 0.423 percent today from 0.421 percent yesterday, according to data from the British Bankers’ Association. Libor reached 0.428 percent on May 7, the highest since Aug. 17, on concern the sovereign-debt crisis triggered by Greece’s budget deficit is hurting the quality of loan collateral. *Banco Santander SA* <http://www.bloomberg.com/apps/quote?ticker=SAN%3ASM>led European banks lower, falling 5.4 percent in Madrid. Spain’s largest lender yesterday surged 23 percent, its biggest rally in 20 years. *BHP Billiton Ltd.* <http://www.bloomberg.com/apps/quote?ticker=BLT%3ALN>, the world’s largest mining company, retreated 3.1 percent in London. Deutsche Boerse AG slipped 2.2 percent in Frankfurt after reporting earnings that missed analysts’ estimates. The *MSCI Asia Pacific Index*<http://www.bloomberg.com/apps/quote?ticker=MXAP%3AIND>fell 1.1 percent, paring yesterday’s 1.5 percent advance. The MSCI Emerging Markets Index slipped 0.7 percent as the retreat in Chinese shares was offset by gains of at least 2.6 percent in Russian and Philippine equity markets, which were closed for trading yesterday. The Philippine peso strengthened 0.8 percent against the dollar, the most among major emerging-market currencies, after *Benigno Aquino*<http://search.bloomberg.com/search?q=Benigno+Aquino&site=wnews&client=wnews&proxystylesheet=wnews&output=xml_no_dtd&ie=UTF-8&oe=UTF-8&filter=p&getfields=wnnis&sort=date:D:S:d1>headed for a landslide presidential election victory, ending concern that the result would be contested. Chinese Growth The *Shanghai Composite Index*<http://www.bloomberg.com/apps/quote?ticker=SHCOMP%3AIND>sank 1.9 percent, bringing its decline from a Nov. 23 high to 21 percent. Investors are concerned that accelerating inflation and surging property prices in China will spur the government to boost interest rates for the first time since 2007, slowing growth in the world’s fastest-expanding major economy and biggest metals user. Copper for delivery in three months fell 1.7 percent to $7,000 a ton on the London Metal Exchange. Aluminum, nickel and zinc also retreated. Gold for immediate delivery advanced 1.6 percent to $1,222.60 an ounce. Crude oil for June delivery rose 0.5 percent to $77.15 a barrel in New York trading after surging 2.3 percent yesterday. http://www.bloomberg.com/apps/news?pid=20601087&sid=aMZyhTuqRql4&pos=1 -- You received this message because you are subscribed to the Google Groups ""GLOBAL SPECULATORS"" group. To post to this group, send email to [email protected]. To unsubscribe from this group, send email to [email protected]. For more options, visit this group at http://groups.google.com/group/globalspeculators?hl=en.
