Stocks, Euro Decline on Debt Crisis Concern; U.S. Futures Drop
The Stoxx Europe 600 Index lost 0.5 percent at 8:40 a.m. in New York as UniCredit SpA, Italy’s biggest bank, tumbled for a second day. S&P 500 futures slid 0.2 percent, after fall 0.9 percent. The euro weakened 0.8 percent to $1.2838, and French 10-year bond yields rose four basis points. Hungary’s BUX index lost 2 percent.
“We expect the euro-zone recession to deepen early in the year and for European financial-market pressures to remain intense in the next few months,” said Dominic Wilson, chief market economist at Goldman Sachs Group Inc. in Frankfurt.
Greek Prime Minister Lucas Papademos said yesterday deeper cuts in incomes and an accord on foreign aid are the only way for the country to avert economic collapse and a “disorderly default.”
The decline in the Stoxx 600 extended yesterday’s 0.6 percent drop. UniCredit slid 14 percent to the lowest level since 1992 after yesterday plunging 15 percent on plans to sell shares in a rights offer at a 43 percent discount.
Banks Decline
Societe Generale SA retreated 2.7 percent as the French bank said it plans to cut about 1,580 jobs at its corporate and investment banking unit. Banco Comercial Portugues SA and Banco Espirito Santo SA lost more than 6 percent in Lisbon.
Applications for U.S. jobless benefits decreased 15,000 in the week ended Dec. 31 to 372,000, Labor Department figures showed today. The median estimate of 38 economists in a Bloomberg News survey forecast 375,000 claims. The average over the past four weeks declined to the lowest level in more than three years.
The data comes before tomorrow’s payrolls report from the Labor Department, which is forecast to show the U.S. economy generated 150,000 jobs last month, according to an economist survey.
A separate release may show the service industry increased last month. The Institute for Supply Management’s non- manufacturing index, due for release at 10 a.m. New York time, rose to 53 in December from 52 the previous month, according to a Bloomberg survey of economists. Fifty is the dividing line between expansion and contraction in the services gauge.
Aid Talks
Hungarian stocks fell for a third day. The average yield on Hungarian 12-month bills jumped to 9.96 percent from 7.91 percent at the last sale of the same maturity on Dec. 22, according to auction results on the state debt management agency’s Bloomberg page. Poland’s WIG20 Index lost 1.6 percent, and the Czech PX sank 2 percent.
The yield on France’s 10-year bond rose to 3.35 percent. The extra yield investors demand to hold French 10-year debt instead of benchmark German bunds rose eight basis points to 147 basis points.
The European Financial Stability Facility is selling 3 billion euros ($3.9 billion) of bonds at a yield spread of almost seven times its first issue a year ago after euro-region sentiment worsened.
The bailout fund will price its February 2015 notes to yield 40 basis points more than the benchmark swap rate today, a banker involved in the deal said. That compares with the six basis-point spread it paid to sell 5 billion euros of July 2016 bonds Jan. 25, 2011, according to data compiled by Bloomberg.
The Dollar Index, which tracks the U.S. currency against those of six trading partners, climbed 0.7 percent. The euro slid 0.7 percent against the yen, approaching an 11-year low, and depreciated 0.2 percent versus the pound.
–With assistance from Claudia Carpenter, Adam Haigh, Andrew Rummer, Daniel Tilles and Jason Webb in London. Editors: Stephen Kirkland, Stuart Wallace
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