U.S. Stocks Fall on Confidence Data as Pound Gains on BOE

U.S. stocks declined as an index of consumer sentiment unexpectedly fell, while the pound strengthened after Bank of England Governor Mervyn King said policy makers aren’t trying to weaken the currency.

The Standard & Poor’s 500 Index slipped 0.3 percent at 10:36 a.m. in New York, after climbing within two points of its record high yesterday. Sterling appreciated 0.4 percent to $1.5137. South Korea’s won weakened for a seventh day on concern policy makers around the world are stepping up efforts to influence currency markets. The Stoxx Europe 600 Index fell 0.5 percent, retreating from the highest levels since 2008. Natural gas jumped as much as 2.9 percent after U.S. stockpiles slid to the lowest level in almost two years.

Markets determine the level of exchange rate, “not us,” King said in an interview with ITV News yesterday. A University of Michigan index showed confidence among American consumers unexpectedly slumped in March, which may signal a cooling in spending, the biggest part of the economy. U.S. industrial production rose more than forecast in February as factories turned out more business equipment and motor vehicles.

“As we hit up against that resistance of all-time highs, it’d be natural to come off of that a little bit, even though the economic data that we’ve gotten today has been pretty good,” Walter Todd, who oversees about $940 million as chief investment officer of Greenwood Capital Associates LLC in Greenwood, South Carolina, said in a phone interview.

The S&P 500 climbed yesterday to within two points of its record closing level of 1,565.15 set in October 2007. The gauge has more than doubled from its bottom in 2009, fueled by corporate earnings that topped estimates and monetary stimulus from the Federal Reserve. The Dow set an all-time high for the eighth day in a row yesterday.

Consumer Confidence

The Thomson Reuters/University of Michigan preliminary index of consumer sentiment for March fell to 71.8, the lowest level since December 2011, from 77.6 in February. The gauge was projected to increase to 78.

Output at factories, mines and utilities climbed 0.7 percent, the most in three months and exceeding the median projection in a Bloomberg survey, figures from the Federal Reserve showed today. Manufacturing in the New York region expanded for a second month in March, with the Fed Bank of New York’s general economic index easing to 9.2 this month from 10 in February.

The pound strengthened against all 10 of its 16 major peers, extending yesterday’s 1.1 percent advance against the dollar, its biggest jump since July. It’s weakened 6.9 percent versus its U.S. counterpart this year.

Brussels Meeting

The euro climbed 0.6 percent to $1.3086 while the yen gained 0.6 percent to 95.58 per dollar.

European Union leaders meet for a second day in Brussels after endorsing moves that may allow countries more time to bring down deficits.

“It all comes down to a market that has become totally hooked on what central bankers have to say,” said Neil Mellor, a foreign-exchange strategist in London at Bank of New York Mellon Corp., the world’s largest custody bank. “King caught the market off guard.”

Japan’s political parties confirmed Haruhiko Kuroda as the next BOJ governor as well as Kikuo Iwata and Hiroshi Nakaso as deputies, ushering in officials who will push for more stimulus.

The won weakened 0.2 percent to 1,110.95 per dollar, headed for a weekly decline after the central bank left interest rates unchanged yesterday and officials said the value of yen, which has lost almost 10 percent against the dollar this year, poses a threat to the economy.

Spanish Bonds

Spain’s 10-year bond yield rose five basis points to 4.91 percent, up from 4.76 percent at the end of last week.

Bank of Ireland sold 500 million euros ($650 million) of five-year covered bonds just two days after the government completed a 5 billion-euro fundraising. The cost of insuring against losses on the sovereign bonds fell four basis point to 164 in the market for credit-default swaps.

The Stoxx 600 has risen 0.5 percent this week, on course for a fourth straight week of gains. Rentokil Initial Plc rallied 11 percent, the biggest jump since 2009, after the world’s largest pest-control company reported an increase in fourth-quarter adjusted pretax profit. Bwin.Party Digital Entertainment Plc dropped 1.7 percent after the gambling company forecast 2013 revenue that trailed analyst estimates.

Natural gas futures advanced as much as 2.9 percent to $3.924 per million British thermal units on the New York Mercantile Exchange.

The MSCI Emerging Markets Index fell for a fifth day, the longest losing streak in four months, dropping 0.5 percent. India’s Sensex index lost 0.7 percent as lenders declined after the central bank said it’s “collecting information” on reports of money laundering. Russia’s Micex Index lost 0.4 percent and banks led a 1.5 percent rally in Turkey’s benchmark gauge, which rebounded from a one-week low. Brazil’s Bovespa index slipped 0.5 percent.

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