The euro slid as the region’s recession deepened more than forecast, while the Standard & Poor’s 500 Index rose to a five-year high after a drop in U.S. jobless claims and a $23 billion buyout offer for HJ Heinz Co.
Europe’s 17-nation currency depreciated 0.7 percent versus the dollar at 4 p.m. in New York. The S&P 500 increased 0.1 percent to 1,521.38, its highest level since October 2007, while the Stoxx Europe 600 Index slipped 0.2 percent. Treasury 30-year bonds rose for the first time in four days as the highest yields at an auction of the securities since May bolstered demand. Japan’s Nikkei 225 Stock Average rose 0.5 percent, and Hong Kong’s Hang Seng Index climbed 0.9 percent after the market reopened following the Lunar New Year holiday.
Gross domestic product in the euro area fell 0.6 percent in the fourth quarter from the previous three months, the worst performance since the first quarter of 2009. Japanese GDP declined for a third straight quarter, stoking speculation Prime Minister Shinzo Abe will step up efforts to end deflation.
“They’re pretty awful figures,” said Neil Mellor, a foreign-exchange strategist at Bank of New York Mellon Corp. in London. “It could get a lot worse because the euro has risen a long way since the start of the fourth quarter. While the Japanese are doing what they’re doing, you can’t refute the fact that people will buy the euro on dips.”
Europe’s shared currency weakened against 15 of 16 major peers. Earlier reports showed Germany’s economy, the largest in Europe, contracted 0.6 percent last quarter, and French GDP dropped 0.3 percent. The currencies of euro-area neighbors also declined, with the Polish zloty, Swedish krona and Norwegian krone sliding versus the dollar.
Hungary’s forint snapped five days of gains, dropping 0.6 percent per euro, after data from the statistics office in Budapest showed GDP tumbled the most in three years. Japan’s yen was stronger against 15 of 16 major peers as Russia’s finance minister said Group-of-20 nations should take a stronger stance against currency manipulation.
The Group of 20 nations said that it recognizes global economic growth is still weak, that stronger economic and monetary union is needed in the euro area and Japan and the U.S. need to resolve fiscal uncertainties, according to a draft of a statement prepared for a meeting of finance ministers and central bank governors in Moscow this week.
In the U.S., fewer Americans than projected filed applications for unemployment benefits last week, Labor Department data showed, while Warren Buffett’s Berkshire Hathaway Inc. and 3G Capital agreed to buy Heinz.
HJ Heinz surged the most since at least 1980, jumping 20 percent to $72.50. Berkshire and 3G will pay $72.50 a share, compared with yesterday’s closing price of $60.48, according to a statement today. Berkshire will spend about $12 billion to $13 billion on the deal for the maker of condiments and Ore-Ida potato snacks, Buffett told CNBC. The deal will also be financed with cash from 3G affiliates, plus the rollover of existing debt, and is valued at about $28 billion including debt, according to the statement.
Berkshire’s Class A shares rose 1 percent to a record $149,240.
Cisco Systems Inc. slipped 0.7 percent as the largest maker of computer-networking gear forecast sales this quarter that missed analysts’ most optimistic projections. US Airways Group Inc. fell 4.6 percent after agreeing to an $11 billion merger with AMR Corp.’s American Airlines.
‘Positive’ on M&A
Mergers and acquisitions have surged this month with megadeals for iconic companies such as Dell Inc. and H.J. Heinz Co., fueling optimism that more buyers are ready to embrace $10 billion pricetags.
Almost $40 billion in deals have been announced today, data compiled by Bloomberg show. Transaction volume has increased by 27 percent so far this year compared with the same period year earlier, signaling buyers are willing to spend again following last year’s mergers slump.
“We’re positive on the fact that M&A will continue to move higher,” Jeff Morris, the Boston-based head of U.S. equities for Standard Life Investments, said in a phone interview. His firm oversees $263 billion in assets. “If we can get some clarity in Washington and if the economy continues to grow, I think you’ll see more and more companies use M&A.”
The S&P 500 is within 3 percent of its record reached that month. Jobless claims decreased by 27,000, the most in a month, to 341,000 in the week ended Feb. 9, Labor Department figures showed today in Washington. The level of filings was lower than any projection in a Bloomberg survey in which the median forecast was 360,000.
Bearish U.S. stock options have fallen to the cheapest level in more than two years on signs the economic recovery is gaining momentum. Puts protecting against a 10 percent decline in the S&P 500 cost 7.88 points more than calls betting on a 10 percent gain, according to three-month options data compiled by Bloomberg. The price relationship known as skew fell to 7.49 on Feb. 1, the lowest since November 2010. The S&P 500 has rallied 6.7 percent this year.
U.S. 30-year bonds rose, with the yield six basis points lower at 3.18 percent, as the euro area’s recession supported demand at a $16 billion auction of the securities.
Two shares fell for every one that gained in the Stoxx 600 as gauges of chemical and telephone companies led losses.
Nestle SA fell 2.3 percent, the most in four months, after the biggest food company reported the slowest sales growth in three years. Renault SA surged 7.7 percent as France’s second-largest carmaker reported better-than-expected operating profit and eliminated debt in its automotive division.
Anheuser-Busch InBev NV jumped 5.9 percent in Brussels after agreeing to sell its brewery in Piedras Negras and grant perpetual rights for the Corona and Modelo brands in the U.S. to Constellation Brands Inc. for $2.9 billion. ABB Ltd., the world’s largest maker of power transformers, advanced 5.6 percent in Zurich after reporting better-than-estimated earnings.
The MSCI Emerging Markets Index added 0.1 percent as declines in Europe, the Middle East and Africa offset gains in Asia. Benchmark gauges in Russia, Turkey, Poland, Hungary and the Czech Republic sank at least 0.4 percent.
The Hang Seng China Enterprises Index of mainland companies climbed 1.4 percent on the first day of trading this week. People’s Insurance Co., New China Life Insurance Co. and Greentown China Holdings Ltd. rose after MSCI Inc. said it will add the stocks to its China index.
India’s Sensex gauge slid 0.6 percent as a report showed the inflation rate dropped to lowest in more than three years.