Stocks, Oil Fall on Greek Aid Talks as Swiss Franc Strengthens
Stocks fell for a fourth day, the longest streak for the MSCI World Index since February, as international finance leaders debated extending aid to Greece and New York manufacturing growth slowed more than forecast. Oil declined and the Swiss franc strengthened.
The MSCI World Index lost 0.6 percent at 9:37 a.m. in New York and the Standard & Poor’s 500 Index slipped 0.4 percent. Greece’s ASE Index sank to a 13-year low and the yield on the government’s 10-year bond rose 17 basis points to 15.607 percent. The 10-year Treasury note was little changed. The Swiss franc appreciated against all 16 of its most-traded peers. Oil fell 0.7 percent while wheat rebounded from last week’s slide.
Greece will plead for a boost in its 110 billion-euro ($155 billion) rescue from European governments and the International Monetary Fund in Brussels, with IMF Managing Director Dominique Strauss-Kahn absent from the talks because of attempted-rape charges in New York. Goldman Sachs Group Inc. cut its weighting on Japanese and South Korean shares, citing the weaker global outlook. The Federal Reserve Bank of New York’s manufacturing gauge for May slid amid a surge in commodity costs.
“There’s nothing close to a resolution” for Europe’s debt crisis, Norval Loftus, the chief investment officer at Allegra Investment Management Ltd., said in a Bloomberg Television interview with Francine Lacqua in London. “There’s a lot of risk in the system. It’s a very important time to maintain a slightly risk-averse outlook.”
Nine of the 10 main industry groups in the S&P 500 retreated, led by energy and consumer-discretionary shares. Lowe’s Cos., the second-largest U.S. home improvement retailer, reported a first-quarter profit of 34 cents a share, less than the average estimate of 36 cents a share in a Bloomberg survey of 19 analysts. The shares dropped 2.9 percent.
The Stoxx Europe 600 Index retreated 0.7 percent, a third day of losses, as about six stocks fell for every one that advanced. Unione di Banche Italiane SCPA (UBI), Italy’s fourth-largest bank, declined 2.6 percent as earnings missed estimates. Securitas AB (SECUB) sank 4.6 percent after the world’s biggest provider of security services, offered to acquire Niscayah Group AB through a share swap.
Greece’s ASE slid 1.9 percent to the lowest level since 1997 as National Bank of Greece SA (ETE) fell 2.9 percent. The extra yield investors demand to hold Greek 10-year bonds instead of similar-maturity German bunds, the euro-region’s benchmark government securities, increased 13 basis points. Bailout talks may be clouded by the arrest of IMF Managing Director Dominique Strauss-Kahn.
Europe’s donor countries, led by Germany, are demanding deeper budget cuts in exchange for granting Greece extra aid or giving it more time to pay back official loans. Any extension of Greece’s bond maturities would need to prevent “the private sector steadily withdrawing from its positions” and shifting the burden to taxpayers, German Finance Minister Wolfgang Schaeuble told ARD television yesterday. “If there is an extension, then everyone has to be extended.”
The yield on Portugal’s 10-year bond fell 19 basis points. Finance ministers in Brussels are set to approve 78 billion euros in assistance for the nation.
The MSCI Emerging Markets Index retreated 1 percent, set for the lowest close since March 23. The Kospi Index (KOSPI) fell 0.8 percent in Seoul after Goldman Sachs cut South Korean shares to “market weight.” The Shanghai Composite Index dropped 0.8 percent as higher Chinese food prices fueled concern inflation will quicken and money-market rates rose to a record high. Russia’s Micex Index slid 1 percent, and the Jakarta Stock Exchange Composite Index lost 0.9 percent.
Oil futures in New York declined 72 cents to $98.93 a barrel, paring the 1.5 percent gain in the previous two sessions. Wheat advanced after falling 8.9 percent in the previous three sessions. The S&P GSCI index of 24 raw materials dropped 0.3 percent, the first decline in three days.
The franc appreciated 0.6 percent against the euro and rose 0.5 percent versus the dollar.
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