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U.S. Futures Gain, Dollar Drops on Bernanke; French Bonds Rise

U.S. equity futures gained, the dollar weakened and French 10-year bond yields fell to a record as deteriorating economic signs stoked speculation the Federal Reserve will hint at further stimulus.

Standard & Poor’s 500 Index futures added 0.3 percent at 11:20 a.m. in London and the Dollar Index slipped 0.1 percent. The Stoxx Europe 600 Index fell 0.1 percent after earlier rising as much as 0.3 percent. France’s 10-year yield tumbled as much as eight basis points to 2.07 percent and Austria’s two-year rate dropped below zero for the first time.

Fed Chairman Ben S. Bernanke will deliver his semi-annual report on the economy and monetary policy before Congress today, after data yesterday showing a contraction in June retail sales. German investor confidence declined for a third month, the ZEW Center for European Economic Research said. The U.S. probably will report industrial output strengthened in June, according to the median of 81 economist estimates compiled by Bloomberg.

“There will be some more action from the Federal Reserve,” said Ewen Cameron-Watt, chief investment strategist in London at the BlackRock Investment Institute, part of BlackRock Inc., which manages about $3.7 trillion of assets. “The U.S. economy remains in a slow-growth environment.”

IMF Forecast

A third monthly drop in U.S. retail sales showed limited employment gains are taking a toll on the biggest part of the economy. The International Monetary Fund cut its 2013 forecast for global economic growth yesterday to 3.9 percent from 4.1 percent as Europe’s debt crisis prolongs Spain’s recession and slows expansions in emerging markets from China to India.

The Citigroup Economic Surprise Index for the U.S., which measures how much data from the past three months is beating or missing the median estimates in Bloomberg surveys, was at minus 64 yesterday, near the almost 11-month low of minus 64.9 reached last week. The ZEW index of investor and analyst expectations, which seeks to predict economic developments six months in advance, fell to minus 19.6 from minus 16.9 in June.

Petroleum Geo-Services ASA, the world’s third-largest surveyor of oil and gas fields, surged 7.2 percent in Oslo after raising its full-year forecast. Rivals TGS Nopec Geophysical ASA and CGGVeritas climbed more than 3 percent.

Alcatel-Lucent SA plunged 15 percent to a three-year low after France’s largest telecommunications-equipment supplier said it expects to miss a 2012 profitability target and posted a second-quarter loss.

Coca-Cola

The gain in S&P 500 futures indicated the U.S. equity gauge will rebound from yesterday’s 0.2 percent drop. Companies including Goldman Sachs (GS) Group Inc., Intel Corp., and The Coca- Cola Co. are scheduled to report second-quarter earnings today.

Reports today may show the U.S. consumer-price index was unchanged in June from a month earlier and industrial production rose 0.3 percent after a 0.1 percent decline in May, according to Bloomberg surveys of economists.

German two-year note yields fell to a record low of minus 0.061 percent, while Spain’s two-year notes slipped, pushing the yield three basis points higher to 4.67 percent after the nation auctioned 3.56 billion euros ($4.38 billion) of bills. The rate on five-year U.S. debt was little changed at 0.6 percent, after reaching a record-low 0.577 percent yesterday.

Belgian notes stayed higher after the nation sold three- month bills at a negative yield for the first time. The two-year yield fell four basis points to 0.23 percent.

The euro appreciated 0.2 percent to $1.2292 and climbed 0.3 percent to 97.13 yen. Japan’s currency weakened for the first time in four days, slipping 0.2 percent to 79.01 per dollar.

Corporate Debt

Corn fell 1 percent after earlier advancing as much as 2.1 percent to the highest since June 2011 amid the worst U.S. drought in a generation. About 31 percent of the crop was in good-or-excellent condition as of July 15, down from 40 percent a week earlier, the U.S. government said yesterday. That’s the worst rating for this time of year since a drought in 1988.

The cost of insuring European corporate debt declined, with the Markit iTraxx Crossover Index of credit-default swaps on 50 mostly junk-rated borrowers falling 6.5 basis points to 666.

The MSCI Emerging Markets Index (MXEF) added 0.7 percent, heading for its highest close since July 10 and a third day of gains. The Shanghai Composite Index rose 0.6 percent from its lowest close since March 2009 after the government said it will boost railway infrastructure investment and forecast economic growth will pick up in the second half.

The Hang Seng China Enterprises Index of Chinese stocks listed in Hong Kong jumped 1.7 percent. Benchmark indexes gained in South Korea, Russia and South Africa.

To contact the reporter on this story: Claudia Carpenter in London at ccarpenter2@abloomberg.net

To contact the editor responsible for this story: Stuart Wallace at swallace6@bloomberg.net

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