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Most Stocks Fall as Bundesbank Criticizes Bond Plan

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Spain Bonds Rise on Crisis Plan Bet as Europe Stocks Pare Gains
Spain’s 10-year yield lost 24 basis points to 6.21 percent at 6:35 a.m. in New York, the least since July 4. Photographer: Angel Navarrete/Bloomberg

Aug. 20 (Bloomberg) -- Most U.S. stocks fell as Germany’s Bundesbank stepped up criticism of the European Central Bank’s bond-buying program and earnings at Lowe’s Cos. trailed estimates. Spanish bonds trimmed gains.

Three stocks fell for every two that rose in the Standard & Poor’s 500 Index, which closed little changed at 1,418.13 at 4 p.m. in New York. It finished within one point of its four-year high reached in April. The index trimmed an earlier drop of as much as 0.4 percent. The Stoxx Europe 600 Index slid 0.5 percent while the euro gained 0.1 percent to $1.2348. Spain’s 10-year yield declined 16 basis points to 6.28 percent after touching 6.16 percent, the least since July 2. Ten-year Treasuries yielded 1.81 percent and copper and nickel retreated.

The S&P 500 has gained for six straight weeks, its longest rally since January 2011. Government bond purchases “entail significant stability risks,” the Bundesbank said in its monthly report today, while the ECB denied a report it was planning to cap yields on bonds of nations in the region.

“We’re basically at the highs from earlier this year,” Michael Strauss, who helps oversee about $26 billion of assets as chief investment strategist at Commonfund in Wilton, Connecticut, said in a telephone interview. “To get significantly through those levels we saw last week, we’re going to have to get another layer of good news.”

Best Buy, Apple

Among U.S. stocks, Lowe’s tumbled 5.8 percent after the home-improvement retailer missed analysts’ profit predictions and cut its earnings forecast. Best Buy Co. lost 10 percent after saying its founder Richard Schulze declined an offer from the board to conduct due diligence and go to shareholders with his buyout offer. Coventry Health Care Inc. jumped 20 percent after Aetna Inc. said it has agreed to buy the medical-care provider for about $5.6 billion.

Apple Inc. rose as much as 2.6 percent to a record $665.15 on optimism that the next version of the iPhone will meet with high demand, gaining an intraday market capitalization of $623.5 billion, higher than Microsoft Corp.’s previous record in 1999.

The yield on the 10-year Treasury note was little changed after earlier climbing to as high as 1.86 percent. The rate has risen from a record low of 1.379 on July 25.

Almost three shares declined for each that advanced in the Stoxx 600, which capped 11 weeks of gains on Aug. 17, the longest winning streak since January 2006.

European Movers

Lonmin Plc slid 4.6 percent as the Sunday Times reported that the commodity producer may raise $1 billion through a rights issue as soon as September after strikes and deadly clashes halted work at its platinum mine in South Africa. The newspaper didn’t identify its source.

The ECB’s governing council may decide at its next gathering to set yield limits on each country’s debt, Spiegel magazine reported yesterday, without saying where it got the information. The ECB said the governing council has not discussed any plan to target the bond yields and that “it is absolutely misleading to report on decisions,” a bank spokesman said in an e-mailed statement today.

German government bonds pared earlier losses, with the 10-year yield up one basis point at 1.51 percent. It reached 1.61 percent on Aug. 16, the highest since June 29.

Emerging Markets

The MSCI Emerging Markets Index fell 0.2 percent to trim its yearly gain to 5.8 percent. The Hang Seng China Enterprises Index of mainland companies listed in Hong Kong dropped 0.4 percent and is down 1.4 percent in 2012. The People’s Bank of China has no plan to cut lenders’ reserve-requirement ratios in the short term, the central bank’s Financial News said in a commentary after data showed new-home prices rose in 49 of the 70 cities tracked by the government.

Russia’s Micex Index slipped 1.1 percent and Poland’s WIG index lost 0.4 percent. Markets in India, Indonesia, Malaysia, the Philippines, Turkey and Hungary were closed for public holidays.

Copper and nickel fell for the first time in three days, losing at least 0.5 percent, while gains of more than 2 percent in silver, soybeans and natural gas sent the S&P GSCI Index of commodities up 0.3 percent. Crude oil was little changed at $95.97 a barrel in New York.

To contact the reporters on this story: Stephen Kirkland in London at skirkland@bloomberg.net; Inyoung Hwang in New York at ihwang7@bloomberg.net

To contact the editor responsible for this story: Lynn Thomasson at lthomasson@bloomberg.net

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