Euro Hits 2014 High as Treasuries Drop; Palladium Soars

The euro rose to a two-month high and Treasuries fell after fewer people filed U.S. jobless claims and the European Central Bank left interest rates at a record low. U.S. stocks pared gains as health-care companies slid while palladium led gains among precious metals.

The euro strengthened 0.9 percent to $1.3861 by 4:48 p.m. in New York as the yen tumbled 0.8 percent. Ten-year Treasury yields added three basis points to 2.74 percent, rising a third day. The MSCI All Country World Index climbed 0.5 percent, led by emerging markets. The Standard & Poor’s 500 Index advanced 0.2 percent to 1,877.03. The ruble slid as Crimean lawmakers called for a referendum to leave Ukraine, while the prospect of sanctions against Russia sent palladium to a one-year high.

Claims for U.S. unemployment benefits fell to a three-month low, stoking optimism over the jobs market before the release of February payrolls data tomorrow. The ECB kept interest rates unchanged as stronger inflation and economic output reduced the need for officials to act. Global stocks are trading at the highest level in more than six years, with MSCI’s world gauge gaining 0.6 percent this week as concern eased Russia’s actions in Crimea would fuel a broader conflict and disrupt markets.

“People are already starting to square up for tomorrow’s job number and laying down bets on it,” James Paulsen, the Minneapolis-based chief investment strategist at Wells Capital Management, which oversees about $360 billion in assets, said in a phone interview. “That’s going to set the tone for the week. If there are really bad numbers, a lot of these gains might get reversed. If we see a positive surprise, the market could make a run up to 1,900.”

Jobs Data

The Labor Department report may show the number of workers that companies added in February trailed last year’s average after a weather-induced slowdown in housing starts and retail sales. Non-farm payrolls probably increased by 150,000 in February while the unemployment rate held 6.6 percent, according to the average of economists estimates compiled by Bloomberg. Payrolls increased by a monthly average of 193,500 in 2013.

The S&P 500 today completed the fifth year of a rally from its lowest intraday level during the bear market triggered by the financial crisis of 2008. The benchmark has surged 182 percent from a low of 666.79 reached March 6, 2009.

Pluristem Therapeutics Inc. climbed 4.2 percent after getting regulatory approval for manufacturing stem-cell therapy products. Costco Wholesale Corp. slipped 2.8 percent after posting fiscal second-quarter profit that trailed analysts’ estimates. Staples Inc. plunged 15 percent after saying it will close as many as 12 percent of its North American stores.

Euro, Yen

The Stoxx Europe 600 Index ended the day little changed after rising above its highest closing level in six years during the session. Aggreko Plc jumped 3.5 percent after saying that it will give shareholders an extra 200 million pounds ($334 million) after reporting that profit beat projections. Bouygues SA rallied 6.6 percent after it bid for Vivendi SA’s French phone unit SFR.

“I don’t see any reason for the equity market stopping its rise,” Bernard Delattre, the president of Altimeo Asset Management in Paris, said by telephone. “The European economy is recovering; the U.S. economy is recovering. Considering the problems in emerging markets, there is a flight to quality to safer economies like Europe and the U.S.”

European Inflation

ECB President Mario Draghi said that inflation in the euro region will accelerate over the next 2 1/2 years, signaling that deflation risks facing the economy may abate. Draghi also reiterated the central bank’s commitment to keeping interest rates low for “an extended period” to shore up the economy’s recovery. Policy makers today kept the ECB’s benchmark rate at an all-time low of 0.25 percent.

The euro advanced versus all of its 16 major counterparts except for the Australian dollar, which rallied after better-than-estimated retail sales and trade data. The yen dropped to a five-week low versus the dollar after an advisory panel said Japan’s Government Pension Investment Fund no longer needed to focus on domestic bonds.

Yields on 10-year British gilts rose five basis points, or 0.05 percentage point, to 2.77 percent as the Bank of England left its benchmark interest rate at 0.5 percent. The central bank has maintained borrowing costs at a record low since March 2009, the longest stretch of unchanged policy since the 1940s. The bank also said today that it will reinvest funds from gilts in its asset-purchase facility that mature tomorrow.

German Bonds

Germany’s 10-year bond yield climbed four basis points to 1.65 percent, while Spanish 10-year yields increased four basis points to 3.40 percent. Spain sold 5 billion euros of bonds at an auction, drawing the lowest yield on record for three-year securities and the lowest since January 2006 for 10-year debt.

The MSCI Emerging Markets Index rose for a third day, advancing 1.2 percent. India’s rupee climbed 1 percent to 61.12 per dollar after data late yesterday showed the nation’s current-account deficit narrowed in the October-December period to $4.2 billion.

The Shanghai Composite Index rose 0.3 percent, led by developers. Government officials at the National People’s Congress in Beijing described the housing market in most cities as stable and said it will get long-term support from urbanization, without specifying new measures to curb demand.

Russia’s Micex Index dropped 1 percent, extending its tumble this week to 7.4 percent. About $55 billion was erased from the value of the nation’s equities March 3 after lawmakers approved troop deployments to Ukraine. The ruble lost 0.7 percent against the central bank’s dollar-euro basket.

Commodity Markets

U.S.-based exchange-traded funds invested $90.9 million in Russian equities yesterday, the most inflows among 46 country-specific funds tracked by Bloomberg. Still, these funds have lost 14 percent of their total assets this year.

Qatar’s benchmark index climbed 2.3 percent as investors shrugged off concern that a diplomatic row between the country and its Gulf neighbors would be prolonged. The measure tumbled 2.1 percent yesterday after the United Arab Emirates, Saudi Arabia and Bahrain, withdrew ambassadors from the gas-rich country over its perceived meddling in regional affairs.

Palladium futures climbed 1.1 percent on the New York Mercantile Exchange to $781.15 an ounce after touching $785, the highest level for an most-active contract since March 8, 2013. Russia is the world’s biggest supplier of the metal.

Gold futures advanced 0.9 percent on the Comex while contracts on silver for May delivery added 1.4 percent. West Texas Intermediate crude oil gained 0.1 percent to $101.56 a barrel as the S&P GSCI commodities index gained 0.3 percent, snapping a two-day retreat.

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