Greece and its debts – it owes the IMF $1.78-million this month – continue to add up to a “volatile period” in the immediate future, as negotiators struggle to reach accord with a frequent standoff approach by the Greeks. This malaise is beginning to have its effects – not least in bond tremors from Italy to Spain. However, while the euro fell, Chinese shares hit a four-month high despite a rise in fuel costs, and a slippage in growth prospects in several countries, not excluding a small drop in the SA currency. – Peter Wilhelm
By Sarah McDonald & Stephen Kirkland
(Bloomberg) — The euro weakened and bonds from Italy to Spain fell as Greece’s debt-payment deadlines drew closer amid a standoff with creditors. Chinese shares rose the most in four months, while oil declined on record output from Saudi Arabia.
Europe’s shared currency declined 0.6 percent to $1.0922 in New York. The yield on 10-year Italian bonds increased six basis points to 1.91 percent. The Stoxx Europe 600 Index and Standard & Poor’s 500 Index futures were little changed. Shares in Shanghai rallied after factory data signalled the country’s economy was stabilising. Brent crude slid 1.3 percent to $64.68 a barrel.
Greece’s creditors showed no signs of budging over what it will take to seal an accord as the country faces four payments totaling almost 1.6 billion euros ($1.78 billion) to the International Monetary Fund this month. Consumer prices rose from Saxony to Bavaria and manufacturing in the euro area expanded, reports showed today. In the US, the Institute for Supply Management’s manufacturing index probably rose in May, and personal income increased in April, according to Bloomberg surveys.
“We’re looking at a very volatile period over next few days with Greek news dominating,” said Guillermo Hernandez Sampere, who helps manage about 150-million euros ($169-million) at MPPM EK in Eppstein, Germany. “There’s this never-ending Greek story getting in all our heads.”
The euro weakened against all but two of its 16 major counterparts. The Bloomberg Dollar Spot Index added 0.3 percent. The yen was little changed at 124.10 per dollar.
Norway’s krone had the biggest drop among major currencies as crude oil prices declined.
The yield on Spain’s 10-year notes jumped four basis points to 1.87 percent and Portugal’s rate climbed nine basis points to 2.66 percent. The five-year, five-year forward inflation swap rate, a market metric identified by European Central Bank President Mario Draghi as a benchmark for the inflation outlook, rose three basis points to 1.76 percent, advancing for a third straight day.
The Stoxx 600 was little changed. Roche Holding AG climbed 2.3 percent and AstraZeneca Plc rose 1.1 percent after positive updates on cancer drugs.
Lloyds Banking Group Plc added 1.4 percent after the U.K. government said it will sell shares in the lender to individual investors over the next year.
Deutsche Annington Immobilien SE jumped 5.3 percent after Germany’s largest publicly-traded owner of homes raised its 2015 profit forecast. Plus500 Ltd. advanced 1.8 percent as online gaming company Playtech Plc agreed to buy the British trading platform whose anti-money-laundering safeguards have come under scrutiny by regulators.
Altera Corp. jumped 5.7 percent in early New York trading, signalling a second day of gains, as people familiar with the matter said Intel Corp. is nearing a deal to purchase the chipmaker.
The MSCI Emerging Markets Index lost less than 0.1 percent and a gauge of 20 currencies slipped 0.4 percent.
China’s stocks rose the most since January as an official manufacturing gauge showed a third month of expansion and speculation increased the government will take steps to tackle local government debt.
The Shanghai Composite Index climbed 4.7 percent and Hong Kong’s Hang Seng China Enterprises Index advanced 1.4 percent.
The official manufacturing Purchasing Managers’ Index was at 50.2 in May, according to the statistics bureau and the China Federation of Logistics and Purchasing in Beijing. That compared with the 50.3 median estimate of economists surveyed by Bloomberg News. Numbers above 50 signal expansion.
Stocks extended gains after people familiar with the matter said policy makers are considering doubling the size of a clean-up programme for shaky local government finances.
South Korea’s Kospi slipped 0.6 percent and the won slipped 0.2 percent, declining for a sixth day. Overseas shipments slumped 10.9 percent in May from a year earlier, underscoring concern that the fall in exports is harming a recovery in Asia’s fourth-biggest economy.
Russia’s ruble slid 1.8 percent. The Bank of Russia suspended one-year foreign-exchanged repurchase auctions, citing market changes. The manufacturing PMI fell to 47.6 from 48.9 in April, according to HSBC Holdings Plc and Markit Economics. The contraction was greater the 48.5 median estimate in a Bloomberg survey.
South Africa’s rand slid 1 percent and Turkey’s lira lost 0.6 percent. Poland’s zloty dropped 0.4 percent versus the euro amid weaker-than-forecast manufacturing.
Oil in New York dropped 1.2 percent to $59.55. The Organization of Petroleum Exporting Countries will probably maintain its collective quota when it meets June 5 in Vienna, according to a survey last month.
US natural gas slid 0.3 percent for a sixth day of losses, the longest streak in more than two years. Futures have fallen to the lowest since April on forecasts for cooler weather that would limit demand from power plants after a Northeast heat wave.
Copper climbed after its first monthly loss since January as factory activity in China, the world’s biggest consumer, expanded for a third month. Prices rose as much as 0.6 percent, while most other industrial metals fell in London trading.