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Wednesday, 4 July 2012
Asian Stocks, Oil Drop On Signs Europe Slump Is Worsening
Bloomberg News | By Glenys Sim - Jul 5, 2012 6:31 AM GMT+0400
Asian stocks retreated from an eight- week high and crude oil dropped after data indicated a worsening economic slump in Europe. The yen weakened against most major peers as Japansignaled further monetary easing.
The MSCI Asia Pacific Index slid 0.4 percent as of 11:25 a.m. in Tokyo, while futures on theStandard & Poor’s 500 Index declined 0.4 percent. The yen traded weaker than 80 versus the dollar for the first time since June 25. The Philippine peso rose toward a four-year high after a Standard & Poor’s upgrade, while crude oil fell 0.8 percent in New York, where financial markets were closed yesterday for a holiday. Treasuries gained before U.S. jobs reports today and tomorrow.
Services output shrank in June for a fifth month in the euro area, unexpectedly contracted in Germany and grew less than forecast in the U.K., reports showed yesterday. Photographer: Tomohiro Ohsumi/Bloomberg
A deteriorating outlook for the global economy is fueling speculation central banks will step up efforts to revive growth. The Bank of Japan will use monetary policy to ensure financial stability, Governor Masaaki Shirakawa said today. TheEuropean Central Bank will probably reduce its benchmarkinterest rate to a record-low 0.75 percent at a policy meeting today, while the Bank of England will step up bond purchases that boost the supply of pounds, according to Bloomberg surveys of economists.
“The market is likely to be in a gridlock,” said Mitsushige Akino, Tokyo-based chief fund manager at Ichiyoshi Investment Management Co., which oversees about 40 billion yen ($501 million). “You want to wait and see how the ECB meeting and the U.S. jobs data will come out.”
The yield on 10-year U.S. Treasuries fell three basis points, or 0.03 percentage point, to 1.60 percent. Employers in the world’s biggest economy are expected to have increased payrolls by 90,000 workers in June after a 69,000 gain in May, according to the median estimate in a Bloomberg survey before Labor Department figures due tomorrow.
“I would still be cautious to suggest that there’s going to be a sustained move upwards,” saidTim Schroeders, a portfolio manager who helps manage $1 billion in equities at Pengana Capital Ltd. in Melbourne. Investors are “skeptical” Europe will address its debt crisis in a timely fashion, he added.
The euro was little changed at $1.2526 following a 0.6 percent slide yesterday. Spain is scheduled to auction three-, four- and 10-year bonds today. The nation’s benchmark 10-year securities yielded 6.41 percent yesterday, compared with a euro- lifetime high of 7.29 percent reached June 18.
The Philippine peso strengthened 0.3 percent to 41.69 per dollar in Manila, near a four-year high of 41.60 reached yesterday. The nation’s long-term foreign currency-denominated debt was increased one level to BB+ from BB, S&P said in a statement yesterday. That’s one step below investment grade and on a par with neighboring Indonesia.