European Stocks Fall as Metals Slide; Yen Drops on G-20 Meeting

By Matthew Brown & Jason Clenfield - Feb 18, 2013 3:41 PM GMT+0400

European stocks fell for a third day and industrial metals slid, while the yen weakened after the Group of 20 nations refrained from censuring Japan’s currency policy.

The Stoxx Europe 600 Index lost 0.3 percent as of 11:31 a.m. in London. Standard & Poor’s 500 Index futures added less than 0.1 percent, with U.S. markets closed today for a holiday. Copper, nickel and aluminum dropped at least 1 percent as China, the biggest industrial metals consumer, reopened after a week- long holiday. The yen weakened 0.5 percent to 94.0 per dollar, while Japanese shares surged 2.2 percent, helping the MSCI Asia Pacific Index of stocks toward an 18-month high.

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A financial trader monitors data on computer screens at the Frankfurt Stock Exchange in Frankfurt. Photographer: Ralph Orlowski/Bloomberg

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The yen has weakened as Prime Minister Shinzo Abe campaigned for looser monetary policy to revive an economy plagued by 15 years of deflation and three recessions in the past five years. Photographer: Tomohiro Ohsumi/Bloomberg

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Two days of talks between G-20 finance ministers and central bankers ended in Moscow with a statement pledging not to "target our exchange rates for competitive purposes," without singling out Japan. Photographer: Yuri Kadobnov/AFP via Getty Images

G-20 finance ministers and central bankers ended talks in Moscow on Feb. 16 pledging not to “target our exchange rates for competitive purposes,” without singling out Japan, where the yen tumbled almost 14 percent against the dollar in three months. An Italian parliamentary election starts Feb. 24 in which former Prime Minister Silvio Berlusconi is running. Bunds rose on speculation European Central Bank President Mario Draghi will hint at a possible interest-rate cut when speaking to lawmakers today.

“This is a pause, but it’s a logical move after the rally we’ve had,” Philippe Gijsels, head of fixed-income research at BNP Paribas Fortis in Brussels, said in a phone interview today. “The market has chosen to focus on the Italian elections as an excuse to take some risk off the table.”

Carlsberg, Natixis

The MSCI Asia Pacific Index gained as much as 0.8 percent to 133.93 after reaching 134.06 Feb. 14, the most since August 2011. The benchmark trades at 14.8 times estimated earnings compared with 13.7 for the S&P 500 and 12.3 for the Stoxx Europe 600 Index, according to data compiled by Bloomberg.

Two shares declined for every one that rose in the Stoxx 600, which was on course for the longest losing streak in a month.Carlsberg A/S tumbled 7 percent, the most in more than six months, as the brewer scrapped its medium-term profitability goal amid increasing costs for making beer and expenses for changes to product buying and logistics. Natixis SA surged 27 percent, the biggest gain since August 2009, as the French investment bank said it plans a 2 billion-euro ($2.67 billion) payment to shareholders.

In Japan, Mitsubishi UFJ Financial Group Inc. and Sumitomo Mitsui Financial Group Inc. advanced more than 4 percent.

The yen fell against all 16 of its major peers, extending losses that made it the worst-performing major currency in the past three months. South Korea’s won climbed as much as 0.7 percent to 8.71 yen, the highest since October 2008.

Pound Weakness

Japanese officials in Moscow denied driving down their currency, arguing that its weakness was a byproduct of their effort to revive the world’s third-largest economy, which would benefit trading partners. The fact the G-20 communique didn’t single out Japan means the yen may weaken toward 100 per dollar in the next few months, UBS AG said in a report.

The pound fell as much as 0.5 percent to $1.5438, the lowest level versus the dollar in more than seven months, after Bank of England policy maker Martin Weale said that U.K. exports may benefit from the currency’s decline.

The euro declined as much as 0.3 percent to $1.3322, falling for a fourth day, ahead of Italy’s parliamentary election on Feb. 24 to Feb. 25. Berlusconi had 27.8 percent support in an SWG Institute survey published Feb. 8, compared with 33.8 percent for Pier Luigi Bersani, his main rival.

Saudi Exports

German 10-year bund yields dropped four basis points to 1.62 percent. Equivalent-maturity Italian yields climbed four basis points to 4.43 percent.

Brent crude for March delivery rose 0.1 percent to $117.77 per barrel after a report from the Joint Organisations Data Initiative showed Saudi Arabia exported 7.06 million barrels of oil a day in December, the least since September 2011. WTI crude dropped 0.3 percent to $95.60 per barrel.

Industrial metals declined, with aluminum retreating 1.2 percent from a six-week high to $2,143 a metric ton. Copper fell 1 percent, while nickel slid 1.7 percent.

Spot gold advanced as much as 0.6 percent to $1,618.9 an ounce as prices at the cheapest in six months lured buyers. Silver and platinum added at least 0.5 percent.

Assets in exchange-traded products holding gold dropped 0.5 percent last week, the biggest drop in almost seven months after billionaires George Soros and Louis Moore Bacon cut their stakes in SPDR Gold Trust, the biggest fund backed by the metal.

The MSCI Emerging Markets Index fell 0.3 percent to 1,063.71, snapping a four-day winning streak. EasTone Telecommunications Co. slid the most since July 24 in Taipei, leading losses, after Barclays Plc downgraded the stock. PT Bumi Resources surged 9.4 percent to the highest level since Aug. 24 after Nurhaida, a commissioner at Indonesia’s Financial Services Authority, said today change in ownership control of the company would require a tender offer.

To contact the reporters on this story: Matthew Brown in London at mbrown42@bloomberg.net; Jason Clenfield in Tokyo at jclenfield@bloomberg.net

To contact the editor responsible for this story: Stuart Wallace at swallace6@bloomberg.net