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European Stocks Rise as Ministers Meet; Yen Gains

By Richard Frost and Eduardo Thomson
January 21, 2013 4:33 PM EST 7 Comments
Yen Strengthens as BOJ Meets
Yen Strengthens as BOJ Meets

European stocks rose today and U.S. equity index futures advanced while German bonds declined as European finance ministers meet for the first time this year to discuss the debt crisis. The yen rose from a two-year low.

The Stoxx Europe 600 Index added 0.3 percent, with the volume of shares changing hands 34 percent less than the 30-day average. Standard & Poor’s 500 Index futures gained 0.3 percent. Japan’s currency strengthened 0.5 percent to 89.64 per dollar at 4:08 p.m. in New York. In Canada, the S&P/TSX increased 0.5 percent. Oil dropped from a four-month high. U.S. natural gas climbed to its highest level since Dec. 7.

European finance ministers met in Brussels today to discuss the debt crisis, while U.S. markets were closed for a public holiday. The Standard & Poor’s 500 index rose last week to its highest level since 2007 as earnings from companies including General Electric Co. and Goldman Sachs Group Inc. beat estimates. Speculation the Bank of Japan (8301) will increase monetary stimulus has pushed the yen 12 percent lower versus the dollar in the past three months.

“We’ve had some decent earnings from the U.S., so the positive sentiment that has been in place since the end of last week is mostly intact,” said Michael Morris, who oversees $1 billion as head of European equities at Mitsubishi UFJ Asset Management in London.

Germany’s 10-year bond yield rose four basis points. or 0.04 percentage point, to 1.59 percent. Cash trading of Treasuries was closed today for the Martin Luther King Jr. holiday.

The euro weakened 0.1 percent to $1.3314. It retreated 0.2 percent to 1.2415 Swiss francs.

Correcting Weakness

The yen gained at least 0.3 percent against all 16 of its major peers, adding 0.6 percent versus the euro. All 23 economists in a Bloomberg survey expect the BOJ to expand asset purchases when its meeting concludes tomorrow, with a median estimate for a 10 trillion yen ($112 billion) increase.

“The pressure to temporarily correct excessive weakness in the yen is likely to increase,” said Junichi Ishikawa, an analyst at IG Markets Securities Ltd. in Tokyo.

Three shares rose for every two that declined in the Stoxx 600. (SXXP) Cie. Financiere Richemont SA, the maker of Cartier jewelry, sank 5.6 percent, the most in seven months, after reporting third-quarter revenue that missed analysts’ estimates. Burberry Group Plc, the U.K.’s largest luxury-goods goods company, fell 1.4 percent and LVMH Moet Hennessy Louis Vuitton SA dropped 1 percent. Admiral Group Plc advanced 4.9 percent as Goldman Sachs Group Inc. upgraded the insurer.

Oil lost 0.1 percent $95.47 a barrel. U.S. natural gas increased 1.8 percent to $3.63 per million British thermal units in electronic trading on the New York Mercantile Exchange.

BlackBerry Options

The MSCI Emerging Markets Index (MXEF) fell from a two-week high, slipping 0.2 percent. Russia’s Micex Index lost 0.2 percent and Brazil’s Bovespa slipped 0.1 percent, while the Shanghai Composite Index gained 0.5 percent. Reliance Industries Ltd., India’s largest company by market value, led the Sensex 0.3 percent higher after profit beat analyst estimates.

Research in Motion Ltd., the Waterloo, Ontario-based manufacturer of BlackBerry handsets, jumped 11 percent after its chief executive officer said it’s considering strategic options including a sale of its hardware production unit.

Malaysia’s benchmark gauge tumbled 2.4 percent, the most since September 2011, on speculation the government will call for an early election that will result in a weaker grip on power.

To contact the reporters on this story: Richard Frost in Hong Kong at rfrost4@bloomberg.net; Eduardo Thomson in Santiago at ethomson1@bloomberg.net

To contact the editor responsible for this story: Justin Carrigan at jcarrigan@bloomberg.net

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