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European Stocks Fluctuate Amid Earnings as Commodities Decline

European stocks swung between gains and losses as companies including Royal Dutch Shell Plc and Unilever reported earnings. Commodities fell before U.S. durable goods orders data, while Spanish bonds rose for a second day.

The Stoxx Europe 600 Index was 0.2 percent lower at 10:08 a.m. in London, and Standard & Poor’s 500 Index futures slipped 0.4 percent. Oil slid 0.9 percent, copper dropped 0.9 percent and the dollar strengthened against the euro. Spain’s two-year note yield declined 20 basis points to 6.22 percent and the Markit iTraxx SovX Western Europe Index of credit-default swaps on 15 governments fell 2.5 basis points to 278.

More than 40 members of the Stoxx 600 (SXXP) reported results today. Economists said reports will show U.S. orders for durable goods rose 0.3 percent in June from 1.3 percent in May, and sales of previously owned homes increased 0.3 percent in June after climbing 5.9 percent in the previous month. Italy sold 2.5 billion euros ($3 billion) of zero-coupon debt due in May 2014.

“It is too early to re-visit any growth-centric trading strategies,” said Kit Juckes, head of currency research at Societe Generale SA in London. “I started the week hoping for evidence that the global economy, having missed a beat in the spring, was bottoming out. It was not to be.”

Company Earnings

Shell, Europe’s biggest oil company, dropped 3.8 percent in London after reporting a bigger decline than projected in second-quarter earnings. Siemens AG, the region’s largest engineering company, slid 2.7 percent after saying its full-year earnings goal has become harder to reach.

Unilever (UNA), the world’s second-largest consumer-goods maker, rallied 5.2 percent in Amsterdam as sales growth beat analysts’ estimates. Rolls-Royce Holdings Plc, the world’s second-largest maker of aircraft engines, rose 4.9 percent as underlying pretax profit topped forecasts.

The cost of insuring against default on corporate debt declined for a second day, with the Markit iTraxx Europe Index of credit-default swaps linked to 125 investment-grade companies dropping 3.5 basis points to 175.75.

The retreat in the S&P GSCI gauge of 24 commodities was led by a 1.2 percent decline in soybeans. Natural gas futures extended yesterday’s drop, which was the biggest in two weeks.

Greek Exit

The euro slid 0.3 percent to $1.2125 after strengthening 0.8 percent yesterday. Citigroup Inc. estimated there is a 90 percent chance Greece will leave the euro within 18 months, having previously given odds of 50 percent to 75 percent.

Italy’s two-year notes climbed, sending yields down 14 basis points to 4.81 percent, after today’s auction. Rates on Germany’s 10-year bonds dropped three basis points to 1.23 percent, and yields on similar-maturity Treasuries were little changed at 1.40 percent.

The MSCI Emerging Markets Index (MXEF) added 0.2 percent, heading for its first gain in five days. China’s Shanghai Composite Index fell 0.5 percent as speculation the government will maintain real-estate curbs overshadowed a State Council plan to develop the nation’s central provinces.

Turkey’s ISE National 100 Index (XU100) jumped 0.5 percent and the lira weakened after the central bank said it may narrow its rates corridor. Benchmark indexes fell 0.4 percent in Russia and 0.3 percent in South Africa.

The S&P 500 has declined for four straight days. More than 60 companies in the U.S. gauge are due to report results today, including Dow Chemical Co., Exxon Mobil Corp., and Facebook Inc. Of the 217 index members to have reported results this quarter, 72 percent have topped analysts’ projections, according to data compiled by Bloomberg.

To contact the reporters on this story: Richard Frost in Hong Kong at rfrost4@bloomberg.net; Paul Dobson in London at pdobson2@bloomberg.net

To contact the editor responsible for this story: Justin Carrigan at jcarrigan@bloomberg.net

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