The Stoxx Europe 600 Index advanced as much as 1.2 percent to the highest level since April 4, while futures on the Standard & Poor’s 500 Index pared losses to trade down 0.2 percent. The yield on the Italian 10-year bond rose five basis points after the nation sold debt, while the similar-maturity Spanish yield dropped for the fourth day. The euro depreciated 0.4 percent to $1.2269, snapping a three-day gain. Japan’s bonds fell, sending 10-year yields up the most in seven weeks. Corn, wheat and soybean futures rallied more than 2 percent.
European Central Bank President Mario Draghi meets with U.S. Treasury Secretary Timothy Geithner in Frankfurt today after leaders in Berlin, Paris and Rome backed him by saying they will do what’s needed to protect the 17-nation euro. Spain’s economy shrank 0.4 percent in the second quarter, the National Statistics Institute in Madrid said today.
Narrower Loss
The Stoxx 600 extended a run of eight weekly gains as four shares gained for every one that declined. Air France-KLM Group rallied as much as 15 percent as Europe’s biggest airline reported a narrower-than-estimated loss. JC Decaux SA sank 12 percent after the French billboard company said so-called organic revenue was lower than forecast in the second quarter.
The euro declined 0.7 percent versus the yen, falling for the first time in four days.
The Swedish krona rose all 16 of its most-traded peers, appreciating 0.8 percent against the euro and 0.5 percent versus the dollar after Statistics Sweden data showed gross domestic product unexpectedly accelerated in the second quarter. GDP grew 1.4 percent, beating a median forecast for a gain of 0.2 percent in a survey of economists by Bloomberg.
Draghi’s proposal involves Europe’s rescue fund buying government bonds on the primary market, buttressed by ECB purchases on the secondary market to ensure transmission of its record-low interest rates, two central bank officials said July 27 on condition of anonymity. Further ECB rate cuts and long- term loans to banks are also up for discussion, one of the officials said.
Sovereign Bonds
The cost of insuring European corporate and sovereign bonds using credit-default swaps declined for a fourth day. The Markit iTraxx Crossover Index of swaps on 50 mostly junk-rated European companies fell 12 basis points to 628, the lowest since April 3. The Markit iTraxx SovX Western Europe Index tied to the debt of 15 governments dropped six basis points to 259, the lowest since March 19.
The MSCI Emerging Markets Index climbed 0.7 percent to a three-week high. The Hang Seng China Enterprise Index of mainland companies listed in Hong Kong gained 1 percent, while the BSE India Sensitive Index added 1.9 percent. The Micex Index jumped 1.6 percent in Moscow. The Shanghai Composite Index fell 0.9 percent to the lowest level since March 2009.
In the U.S., Federal Reserve policy makers meet this week before a jobs report to decide whether additional stimulus is needed to combat a slowdown in the world’s biggest economy.
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