Bond Auctions Fail in Longest Stretch of 2011 as GDP Slows: Russia Credit

Russia’s RTS stock-index futures fell, indicating stocks may drop in Moscow, as concern over the slowing U.S. and European economies overshadowed rising commodity prices.

Futures on the dollar-denominated index expiring in September slid 1.4 percent to 163,790 yesterday after Moscow’s Micex Index (INDEXCF) climbed 1.9 percent. Futures contracts on OAO Gazprom, the world’s largest gas producer, lost 1 percent, while those for OAO Lukoil, the Russian oil producer with the most assets overseas, sank 0.9 percent. The Micex may open down 2 percent at the start of trading today, according to Alfa Bank.

French and German leaders rejected expanding a 440 billion- euro ($636 billion) rescue fund and rebuffed calls to borrow collectively as economic growth in the euro area slowed more than economists forecast last quarter. The Federal Reserve vowed last week to keep interest rates at a record-low through mid-2013 to help reignite an economy that grew 1.6 percent in the second quarter, the slowest pace since contracting in 2009.

The market is being affected by “the same old issues around global growth concerns, unhappiness with how the euro zone is handling the periphery crisis, lack of strong solutions,” Paul Biszko, an emerging-market strategist at RBC Capital Markets in Toronto, said by e-mail. “Lack of good news and dip-buyers are leaving markets struggling.”

Copper gained 0.9 percent in New York, while aluminum, lead, and nickel prices rose in London. Crude oil rose 1.1 percent to $87.58 a barrel in New York. Urals crude, Russia’s chief export blend, added 0.2 percent to $109.18 a barrel.

U.S. Inflation

Wholesale prices in the U.S. rose more than forecast in July, led by higher prices for tobacco, trucks and pharmaceuticals. The 0.2 percent advance in the producer price index followed a 0.4 percent drop in June, Labor Department figures released yesterday showed. Economists forecast a 0.1 percent increase, according to the median estimate in a Bloomberg survey.

The data suggests “Fed policy makers are unlikely to rush to further easing,” Michael S. Hanson, an economist at Bank of America Merrill Lynch in New York, wrote in a client note today.

Gross domestic product in the 17-nation euro area rose 0.2 percent in the three months to June 30 from the first quarter, according to European Union data published on Aug. 16. That was less than the 0.3 percent median forecast of economists surveyed by Bloomberg. Germany’s economy expanded 0.1 percent in the period, more than the 0.5 percent median estimate.

The number of falling stocks exceeded gainers in the U.S. S&P 500 Index (SPX) amid investor speculation the Fed may not consider another economic stimulus program to avert a recession.

The Fed’s interest-rate pledge was “inappropriate policy at an inappropriate time,” Charles Plosser, president of the Philadelphia Fed, said yesterday in a Bloomberg Radio interview. Dallas Fed chief Richard Fisher said the central bank shouldn’t enact policy to protect stock investors. Both officials dissented from the Fed’s Aug. 9 statement.

The Market Vectors Russia ETF, a U.S.-traded fund that holds Russian shares, advanced 1.3 percent to $32.63.

To contact the reporter on this story: Belinda Cao in Beijing at lcao4@bloomberg.net

To contact the editor responsible for this story: David Papadopoulos at papadopoulos@bloomberg.net

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