Stocks Rise With Euro on Inflation as Oil Maintains DropRachel Evans and Paul Dobson
European stocks rose, with the benchmark index reaching a five-year high, while Spanish bonds declined on signs of accelerating inflation in the 17-nation bloc. The euro climbed against the yen and the pound advanced while crude oil held declines and gold rallied.
The Stoxx Europe 600 Index gained 0.4 percent to the highest close since May 2008, and yields on Spanish five-year notes rose six basis points to 2.66 percent. Most Brazilian stocks fell while Canadian shares climbed as gold rose for the first time in three days in London. The euro gained to a four-year high versus the yen and the pound touched the strongest price since January. West Texas Intermediate oil held near a six-month low and Brent crude lost 0.4 percent.
Germany’s annual inflation rate, calculated using a harmonized European Union method, rose to 1.6 percent this month from 1.2 percent in October, damping bets the European Central Bank will loosen monetary policy. Bank of England Governor Mark Carney said allowances under Britain’s Funding for Lending Scheme will only apply to business lending from 2014 in a move aimed at restraining the U.K.’s house-price boom. U.S. stock and bond markets were shut for Thanksgiving.
“The more resilient German inflation is, the higher the hurdle is for more easing from the ECB,” said Eimear Daly, a currency-market analyst at Monex Europe Ltd. in London. “The inflation number from Saxony significantly boosted the euro.”
The Stoxx 600 has gained 0.9 percent in November, on track for a third monthly gain. The European index has advanced 16 percent this year, compared with a 27 percent jump in the Standard & Poor’s 500 Index.
Thomas Cook Group Plc rose 15 percent in London today after the travel operator posted a 49 percent increase in full-year profit. Rio Tinto Group, the world’s second-biggest mining company, added 3.9 percent after saying it will cost $3 billion less than projected to increase iron ore output capacity.
The Standard & Poor’s/TSX Composite Index added 0.1 percent in Toronto as Detour Gold Corp. climbed 14 percent and Iamgold Corp. rose 3 percent. Bullion for immediate delivery rose 0.5 percent in London after falling as much as 0.3 percent, and gold for February delivery added 0.5 percent on the Comex in New York. Platinum gained 0.7 percent.
DHX Media Ltd. jumped as much as 38 percent in Toronto after agreeing to buy Family Channel, Disney XD and other channels from Bell Media, a unit of BCE, for about C$170 million in cash.
The MSCI Emerging Markets Index rose 0.4 percent in a second day of gains, with Dubai’s benchmark index jumping 1.6 percent to its highest close in five years. Brazil’s Ibovespa closed little changed as 38 stocks fell while 29 climbed.
Vale SA, the world’s biggest iron-ore producer, gained 2.7 percent in Sao Paulo, the most in six weeks on a closing basis. The company agreed to pay 22.3 billion reais ($9.6 billion) to settle a decade-long tax dispute with Brazil over profits at its foreign units, ahead of a deadline tomorrow.
A gauge of U.K. homebuilders fell 1.6 percent after the Bank of England’s announcement. Barratt Developments Plc lost 4.9 percent and Persimmon Plc slid 6.1 percent.
Economic confidence in the euro-area rose more than analysts forecast in November, with an index of executive and consumer sentiment increasing to 98.5 from 97.7 in October, the European Commission in Brussels said today. Consumer prices rose in Spain in November, separate data showed.
Spain’s 10-year bond yields were little changed at 4.15 percent, while the rate on similar-maturity German debt slipped to 1.7 percent.
Germany’s 10-year break-even rate, a gauge of inflation expectations that measures the yield difference between bunds and index-linked securities, rose two basis points to 1.44 percentage points after closing at 1.42 percentage points yesterday, the least since May 2012.
The cost of insuring against losses on corporate bonds touched the lowest level since April 2010. The Markit iTraxx Europe Index of credit-default swaps on 125 investment-grade companies fell to as low as 76 basis points.
Futures on the Standard & Poor’s 500 Index expiring next month climbed 0.2 percent after the index rose yesterday to a record. The gauge of U.S. equities has rallied 2.9 percent this month ans is on pace for the biggest annual jump since 1997.
Exporters led gains in Asian stocks after U.S. data yesterday showed jobless claims in the world’s largest economy fell while consumer sentiment exceeded estimates.
“Asia’s earnings growth does remain largely leveraged to the global economy,” Michael Kurtz, the Hong Kong-based head of global equity strategy at Nomura Holdings Inc., said in an e-mail. “Our economists expect the U.S. economy finally to accelerate to a more robust pace in 2014.”
Japan’s Nikkei 225 rose 1.8 percent, the most in a week, as Honda Motor Co., which gets more than 80 percent of its sales outside Japan, advanced 1.5 percent.
The euro climbed 0.3 percent, rising a sixth day, to 139.12 yen, the strongest intraday level since June 2009, while the pound gained a third day, adding 0.4 percent versus the dollar.
Indonesia’s rupiah weakened 1.1 percent versus the dollar to its lowest closing level in 4 1/2 years.
The Australian dollar, known as the Aussie, snapped its longest losing streak versus the greenback since May, rising 0.4 percent to 91.14 U.S. cents. Capital spending increased 3.6 percent from the second quarter, compared with the median forecast in a Bloomberg survey for a 1.2 percent drop.
Brazil’s real climbed 0.6 percent against the dollar, ending a three-day drop, while swap rates sank. The central bank raised Brazil’s benchmark interest rate to 10 percent from 9.5 percent yesterday, in line with analyst estimates, as a weaker currency and widening budget deficit spur inflation. Brazil’s Treasury said today the government’s primary surplus was 5.4 billion reais in October, trailing the median estimate among analysts for an 8 billion-real surplus.
WTI crude fell less than 0.1 percent in electronic trading in New York to $92.25 a barrel, holding at the lowest level since June. A government report yesterday showed stockpiles rose for a 10th week in the U.S., the world’s biggest oil consumer. Brent fell to $110.86 a barrel.
Natural gas futures gained 1 percent in a seventh day of gains, the longest rally since January 2011, data compiled by Bloomberg show.