By Bloomberg News - Aug 13, 2012 11:18 AM GMT+0400
European and Asian stocks fell for a second day and copper declined as slowing growth inJapan added to signs of a deepening economic slowdown. Corn retreated after a record struck last week.
The Stoxx Europe 600 Index dropped 0.2 percent and the MSCI Asia Pacific Index fell 0.2 percent at 8:09 a.m. in London. Standard & Poor’s 500 Index futures slipped 0.3 percent. Copper fell 0.6 percent to $7,446 a metric ton in London. The dollar gained against most of its major peers and treasuries advanced. Corn dropped 0.9 percent in Chicago while wheat declined 1.4 percent.
Bank of England Governor Mervyn King said in an article in the Mail on Sunday newspaper that the euro-area crisis has “no obvious end in sight.” Photographer: Chris Ratcliffe/Bloomberg
Japan’s second-quarter economic data comes as Bank of America Corp. cuts its growth outlook for China. Bank of England Governor Mervyn King said Europe’s crisis has “no obvious end in sight” before a report tomorrow that may show the euro- area’s economy contracted in the three months through June 30. Federal Reserve Bank of San Francisco President John Williams said it’s time to move ahead with a third round of asset purchases, according to the San Francisco Chronicle.
“Japan’s GDP highlighted the fragility of the global economic situation,” said Jonathan Cavenagh, a strategist at Westpac Banking Corp. (WBC) inSingapore. “Tomorrow’s GDP from the euro zone and the key European economies is likely to highlight a similar situation.”
The world’s third-largest economy expanded at an annualized 1.4 percent in the three months through June, compared with a revised 5.5 percent expansion in the first quarter, the Cabinet Office said today. The median forecast of 24 economists surveyed by Bloomberg was for 2.3 percent growth.
China Economy
Bank of America Corp. cut its 2012 economic growth forecast for China to 7.7 percent from 8 percent as growth prospects in developed economies are getting worse and further policy easing is constrained by the nation’s rebounding home prices and leadership transition.
The MSCI All-Country World Index of stocks in developed and emerging markets snapped a six-day rally that’s the longest streak since January. The Asia-Pacific (MXAP) index dropped 0.2 percent, with about five stocks falling for every four that gained. Of the 396 companies on the Asia-Pacific gauge to have reported earnings since May 16, and for which Bloomberg has estimates, 55 percent fell short of projections.
China’s Shanghai Composite Index fell 1.5 percent, South Korea’s Kospi Index slid 0.7 percent and Hong Kong’s Hang Seng Index dropped 0.3 percent.
Aussie, Kiwi
Treasuries rose for a second day, with benchmark 10-year yields falling two basis points to 1.64 percent. The dollar advanced 0.3 percent against Australia and New Zealand’s currencies. The euro fell 0.1 percent to $1.2282.
Data tomorrow may show the euro-area region’s economy shrank 0.2 percent in the second quarter, according to economists surveyed by Bloomberg News. France probably contracted by 0.1 percent from the previous period and German growth slowed to 0.2 percent, separate surveys showed.
“There is a tug-of-war in global markets between stimulus expectations and bad economic fundamentals,” said Ayako Sera, a market strategist at Sumitomo Mitsui Trust Bank Ltd., which has 33 trillion yen ($422 billion) in assets.
Copper fell for a fourth day on concern that a slowdown in China, the biggest consumer, will damp demand. The metal for delivery in three months fell as much as 0.8 percent to $7,431 a ton on the London Metal Exchange.
Corn declined on concern that record prices will hurt demand after the U.S. government said that drought in the Midwest will drive the nation’s average yield to the lowest level 1995. The December-delivery contract fell as much as 1.1 percent to $8.0075 a bushel. Futures surged to a record $8.49 on Aug. 10 and have gained 25 percent this year.
Sales at U.S. retailers probably rose in July for the first time in four months as employment picked up, economists said before reports this week. Still, the central bank should begin a third round of bond purchases to stem slowing growth, Williams, a voting member of the Federal Open Market Committee this year, said in an interview with the San Francisco Chronicle.
To contact Bloomberg News staff for this story: Chua Baizhen in Beijing atbchua14@bloomberg.net
To contact the editor responsible for this story: Nick Gentle at ngentle2@bloomberg.net
