The euro rose to a four-year high against the yen as annual inflation in German accelerated in November more than economists forecast, damping bets the European Central Bank will further loosen monetary policy.
The shared currency climbed for a third day against the dollar as separate reports showed consumer-price growth in the German states of Saxony and North Rhine-Westphalia increased for the first time in five months. The ECB cut its benchmarkinterest rate this month after inflation in the currency bloc slowed to a four-year low in October. The pound rose for a third day versus the dollar as Bank of England GovernorMark Carney said the central bank will end incentives for mortgage lending.
Nov. 28 (Bloomberg) -- Bank of England Governor Mark Carney talks about financial stability and policy tools to restrain the U.K.’s house-price boom. He speaks at a news conference in London alongside Monetary Policy Committee members Paul Fisher and Jon Cunliffe, Prudential Regulation Authority Chief Executive Officer Andrew Bailey and Andy Haldane, executive director for financial stability. (Source: Bloomberg)
“‘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. inLondon. ‘‘The inflation number from Saxony significantly boosted the euro,’’ she said, referring to the first regional report to be released.
The euro climbed 0.2 percent to 139.06 yen at 1:13 p.m. London time after advancing to 139.18, the highest since June 2009. The shared currency added 0.1 percent to $1.3594. The dollar rose 0.1 percent to 102.31 yen, after touching 102.37 the strongest level since May 29.
U.S. financial markets are shut today for a public holiday.
The annual inflation rate in Germany, calculated using a harmonized European Union method, rose to 1.6 percent this month from 1.2 percent in October. The median forecast of analysts in a Bloomberg survey was for a reading of 1.3 percent.
Inflation in Saxony accelerated to 1.4 percent in November from 1.1 percent the previous month, the German Statistics Office of Saxony in Kamenz said today. Similar reports from the regions of Brandenburg, North Rhine Westphalia, Baden Wuerttemberg and Hesse also showed quickening price rises.
Analysts in a separate Bloomberg survey estimate European Union statistics office data tomorrow will show consumer prices in the region rose 0.8 percent in November from a year ago, after increasing 0.7 percent the prior month.
‘‘The very weak reading on CPI last time led to an ECB rate cut, so the data will be closely watched,’’ said Noriaki Murao, the New York-based managing director of the marketing group for financial markets at Bank of Tokyo-Mitsubishi UFJ Ltd. ‘‘The euro will be swayed depending on whether it will beat or trail expectations in a thin market.’’
The pound rose as Carney said allowances under the central bank’s Funding for Lending Scheme will only apply to business lending from 2014 and will no longer be available for home loans.
‘‘Sterling reacted positively to what Carney said because the perception is that the Bank of England is using macro-prudential measures to head off risk to market stability that could come from the housing market,’’ said Lee Hardman, a currency strategist at Bank of Tokyo-Mitsubishi UFJ Ltd. in London.
The pound rose 0.3 percent to $1.6333 after climbing to $1.6353, the highest since Jan. 2. It gained 0.2 percent to 83.25 pence per euro after touching 83.14 pence, the strongest since Nov. 7.
The pound has risen 7.4 percent in the past six months, the best performer among 10 developed-nation currencies tracked by Bloomberg Correlation-Weighted Indexes. The dollar fell 2 percent and the euro appreciated 4.3 percent.
Australia’s dollar rose for the first time in seven days after data showed private capital spending jumped 3.6 percent in the third quarter from the previous period, when it rose a revised 1.6 percent. The median forecast of economists surveyed by Bloomberg was for a 1.2 percent decline.
The Aussie rose 0.4 percent to 91.19 U.S. cents, after declining to 90.65 yesterday, the weakest since Sept. 4.
Indonesia’s rupiah weakened beyond 12,000 per dollar for the first time since 2009 after a failed debt sale added to concern fund inflows are slowing on the prospect of a cut in stimulus by the Federal Reserve. The rupiah reached 12,028 per dollar, the weakest since March 2009, before closing 1.1 percent lower at 12,015 per dollar, prices from local banks show.
European stocks rose, extending a third consecutive monthly advance, as mining companies and banks led gains. U.S. index futures and Asian shares also increased.
Rio Tinto Group climbed 2.9 percent after saying it will spend $3 billion less than projected to increase iron-ore output capacity. Boliden AB (BOL) added 3.9 percent as Morgan Stanley raised its rating on the stock. Thomas Cook Group Plc (TCG) rose 13 percent after the travel operator posted a 49 percent increase in full-year earnings. British tobacco companies slipped after a U.K. minister announced the review of cigarette packaging.
The Stoxx Europe 600 Index advanced 0.3 percent to 325.04 at 12:51 p.m. in London. Standard & Poor’s 500 Index futures rose 0.2 percent after the equity gauge closed at a record yesterday. The MSCI Asia Pacific Index climbed 0.6 percent with Japanese equities ending at the highest in almost six years. U.S. equity and bond markets are closed today for the Thanksgiving holiday.
“Investors are still bullish equity,” said James Butterfill, who helps manage about $50 billion as head of global equity strategy at Coutts & Co. in London. “Market sentiment will continue to improve as people’s outlook for corporate earnings in Europe picks up. Valuation multiples keep on expanding, and when you’re sitting on quite a good return year-to-date, you wonder if you should take profits now.”
The Stoxx 600 has added 0.8 percent in November, heading for the ninth monthly advance of the year. The gauge has gained 16 percent in 2013 and was trading at 15.2 times projected earnings yesterday, near the highest valuation since the end of 2009, data compiled by Bloomberg show.
More than $8 billion have been added to global equity exchanges this year, the most since 2009, as central banks around the world pledged to continue supporting the economic recovery for as long as needed.
A European Commission report showed a gauge of economic confidence climbed for a seventh month to 98.5, exceeding the median economist forecast of 98. A separate report today confirmed that consumer confidence in the 17-nation euro area declined in November.
Rio added 2.9 percent to 3,230 pence. The world’s second-biggest miner plans to increase annual iron-ore production capacity in Western Australia to 360 million metric tons by 2017, up from 290 million tons by the end of June next year, London-based Rio said in a statement.
Boliden, a Swedish copper and zinc producer, rose 3.9 percent to 94.15 kronor. Morgan Stanley raised its rating on the shares to overweight, similar to a buy recommendation, from equalweight, estimating that mining growth and increasing prices for copper refining will drive the shares higher.
Rio and Boliden’s jumps helped send the Stoxx 600 Basic Resource Index up 1.5 percent today for the biggest gain among 19 industry groups.
Thomas Cook surged 13 percent to 173.8 pence. Earnings before interest and taxes rose to 263 million pounds ($430 million) in the year ended Sept. 30 from last year’s 177 million pounds, according to a statement today.
A gauge of European banks listed on the Stoxx 600 rose 0.7 percent, the second-largest advance among 19 industry groups. Banco Comercial Portugues SA added 2.6 percent to 12.4 euro cents. Barclays Plc increased 2 percent to 267.7 pence, and Commerzbank AG advanced 2.6 percent to 10.82 euros.
Imperial Tobacco Group Plc retreated 2.3 percent to 2,307 pence and British American Tobacco Plc fell 0.7 percent to 3,249 pence. The U.K. government reversed its position on plain cigarette packs for the second time in four months. U.K. Health Minister Jane Ellison told BBC Radio 4 that the government is considering introducing plain packaging.
Kingfisher Plc (KGF) declined 5.3 percent to 375.2 pence, its biggest loss in more than two years, after Chief Executive Officer Ian Cheshire said consumer confidence inFrance “is still weak with no obvious signs of an imminent improvement.” Europe’s largest home-improvement retailer also reported same-store sales growth of 0.4 percent for its B&Q chain in the U.K. and Ireland, missing analysts’ estimates. France and the U.K. together accounted for about 81 percent of sales, data compiled by Bloomberg show.
U.K. homebuilders dropped after the Bank of England said it will end incentives for mortgage lending. Barratt Developments Plc fell 3.3 percent to 335.2 pence after losing as much as 10 percent. Persimmon Plc slipped 4.5 percent to 1,190 pence.
Compass Group Plc (CPG) lost 0.8 percent to 931 pence after Citigroup Inc. cut itsrating on the stock to neutral from buy. Shares of the world’s biggest catering company rallied 29 percent in 2013 through yesterday’s close, compared with a gain of 13 percent for the U.K.’s FTSE 100 Index. The stock yesterday climbed to its highest price since the business was spun out of Granada Compass Plc in February 2001.
Remy sank the most since March 2009 after forecasting that annual profit will decline by at least 10 percent. Repsol SA advanced 5 percent after the governments of Spain and Argentina reached a preliminary agreement to compensate the Madrid-based oil company for its stake in YPF SA. Algeta ASA rallied the most in more than two years after saying that Bayer AG has started talks to buy the Norwegian company.
Financial traders monitor data on computer screens at the Frankfurt Stock Exchange in Frankfurt. Photographer: Ralph Orlowski/Bloomberg
The Stoxx Europe 600 Index slipped 0.4 percent to 323 at 2:29 p.m. in London. The equity benchmark has surged 15 percent this year as central banks around the world pledged to leave interest rates near record lows for a prolonged period.
“A small consolidation is taking place on the back of a few disappointing earnings reports in the beverage sector,” Ion-Marc Valahu, a co-founder and fund manager at Clairinvest in Geneva, wrote in an e-mail. “So far it only looks like a short-term pull back.”
U.S. equity markets will close on Nov. 28 for the Thanksgiving holiday. The VStoxx Index, which measures expected volatility on the Euro Stoxx 50 Index using options prices, slid 1.2 percent today.
National benchmark indexes declined in 13 of the 18 western-European markets. The U.K.’s FTSE 100 retreated 0.5 percent, France’s CAC 40 slipped 0.2 percent.Germany’s DAX decreased less than 0.1 percent.
Remy slumped 8.6 percent to 65.78 euros after the maker of Remy Martin cognac forecast that profit will drop in its financial year through March, with trading worsening in the next six months, because of lower sales in China. The company said that its distribution network in the world’s second-largest economy had high levels of inventory. Chief Executive Officer Frederic Pflanz said on a conference call that profit may fall 20 percent.
Pernod Ricard and Diageo Plc, Remy’s larger rivals, retreated 2.8 percent to 84.16 euros and 1.5 percent to 1,970.5 pence, respectively.
Banca Monte dei Paschi di Siena SpA slid 5.7 percent to 18.4 euro cents after its board decided to increase a rights offer to 3 billion euros ($4.1 billion). The bank had planned to raise 2.5 billion euros through the share sale, which it intends to complete by the end of of the first quarter of 2014.
Hugo Boss AG slipped 1.9 percent to 97.23 euros after the German luxury-clothing maker controlled by buyout firm Permira Advisers LLP predicted that it will miss a 2015 target to achieve a 25 percent margin based on earnings before interest, taxes, depreciation and amortization.
Repsol climbed 5 percent to 19.37 euros after ministers made a new offer to compensate the oil producer for the 51 percent stake in YPF seized by Argentina in April 2012. The Spanish oil company in June rejected an offer of assets valued by Argentina at $3.5 billion plus a further $1.5 billion to develop the project, according to a regulatory filing.
Algeta ASA surged 32 percent to 350.30 kroner after the Oslo-based drugmaker said it has received a preliminary acquisition proposal from Bayer AG for 336 kroner ($54.87) a share. Algeta said in a statement that the German company’s proposal does not guarantee a deal will take place. Bayer slipped 0.1 percent to 95.98 euros.
In the U.S., the S&P Case-Shiller index of property prices in 20 cities rose 13.3 percent in September, more than the 13 percent forecast by economists surveyed by Bloomberg. The gauge of house values increased 12.8 percent in August.
A separate report at 10 a.m. may show that confidence among U.S. consumers increased in November. The Conference Board’s index rose to 72.6 from 71.2 in October, according to the median forecast in a Bloomberg survey of economists.
U.S. stock-index futures advanced, indicating the Standard & Poor’s 500 will rebound from yesterday’s decline, as a report indicated fewer Americans than forecast filed claims for jobless benefits.
Green Mountain Coffee Roasters Inc., the maker of Keurig-brand single-cup pods and machines, jumped 6.4 percent after it reported fourth-quarter profit that beat estimates. Target Corp. lost 3.9 percent after profit declined as U.S. consumers curtailed spending. Dollar Tree Inc. slid 5.6 percent as third-quarter earnings fell short of forecasts.
Traders work on the floor of the New York Stock Exchange in New York. Photographer: Jin Lee/Bloomberg
Futures on the S&P 500 expiring in December rose 0.3 percent to 1,784.4 at 8:32 a.m. in New York. Dow Jones Industrial Average futures rose 53 points, or 0.3 percent, to 15,931 today.
The S&P 500 slid for a third day yesterday after minutes of the Federal Reserve’s last policy-setting meeting indicated it may reduce monetary stimulus in coming months as the economy improves.
Applications for unemployment benefits in the U.S. declined to the lowest level in almost two months, showing further healing in the labor market. Jobless claims in the week ended Nov. 16 dropped by 21,000 to 323,000, the fewest since the week ended Sept. 28, from a revised 344,000 the previous week, the Labor Department said today inWashington. The median forecast of 47 economists surveyed by Bloomberg called for a drop to 335,000.
A separate report from the Fed Bank of Philadelphia will show that manufacturing growth in the area, which covers eastern Pennsylvania, southern New Jersey and Delaware, slowed in November. The bank’s general economic index fell to 15 from 19.8 in October, according to the median forecast of 59 economists surveyed by Bloomberg News. Readings greater than zero signal growth.
The S&P 500 has rallied 25 percent in 2013, poised for its best year in a decade, following stimulus from the Fed and better-than-estimated earnings. The gauge traded for about 17 times its companies’ reported earnings at its last record on Nov. 15, the highest valuation since May 2010.
Green Mountain Coffee Roasters jumped 6.4 percent to $65.76. Fourth-quarter net income increased 38 percent to $127 million, or 83 cents a share, from $91.9 million, or 58 cents, a year earlier, Waterbury, Vermont-based Green Mountain said yesterday. Excluding some items, profit was 89 cents a share. Analysts estimated 75 cents, on average.
Target dropped 3.9 percent to $63.90. The second-largest U.S. discount retailer said third-quarter profit fell 46 percent as U.S. consumers facing higher taxes and unsteady employment curtailed spending. Net income in the quarter ended Nov. 2 slid to $341 million, or 54 cents a share, from $637 million, or 96 cents, a year earlier.
Dollar Tree slid 5.6 percent to $55.60. The retailer said third-quarter sales fell short of analysts’ estimates and lowered the top end its full-year revenue target.