Euro Weakens on Greek Debt Concerns; Oil, Copper, Wheat Decline
May 30, 2011, 4:26 PM EDTBy Shiyin Chen
May 30 (Bloomberg) -- The euro weakened for the first time in three days versus the dollar, while oil and copper fell in New York on concern European governments will struggle to resolve the region’s debt crisis amid a slowing global recovery.
The euro declined against 13 of 16 major peers at 4 p.m. in New York. The yield gap between Portuguese and German 10-year bonds climbed to a record and Italian yields rose as the government sold debt. Crude oil lost 0.2 percent, copper futures broke a four-day winning streak and wheat sank 4.9 percent in Paris. The Stoxx Europe 600 Index lost 0.1 percent as EON AG and RWE AG dropped after German Chancellor Angela Merkel’s coalition endorsed a plan to close all atomic-power plants by 2022.
Greek Prime Minister George Papandreou said he’ll press ahead with new austerity measures after failing to win backing from the main opposition parties as he races to keep bailout funds flowing and avoid default. U.S. employers probably hired fewer workers in May and factory orders in the world’s largest economy grew at the slowest pace in seven months, economists said before reports this week.
Greece “will be the focus this week, whether they can agree on the austerity conditions that are required,” Tim Condon, head of Asia research at ING Groep NV, said in a Bloomberg Television interview from Hong Kong. Doubts about the global economy will first “hit the peripheral European debt crisis countries,” he said.
Austerity Plan
The euro slipped 0.3 percent to $1.4277 and fell 0.1 percent to 115.57 yen. Antonis Samaras, leader of Greece’s biggest opposition party, New Democracy, rejected the plan at a meeting with Papandreou and other opposition leaders in Athens, saying his party wouldn’t be blackmailed. European Union officials have called for consensus on the package, which includes an additional 6 billion euros ($8.6 billion) of budget cuts and a plan to speed 50 billion euros of state-asset sales, before approving more aid that Greece needs to avoid default.
The European Union may withhold the next amount of credit to Greece after a report by an international panel of inspectors concluded that the debt-laden country has missed all the fiscal targets agreed in its rescue plan, Der Spiegel said, without saying how it obtained the information.
Portuguese 10-year bonds fell the most in a week, sending the yield spread with German bunds, Europe’s benchmark government security, 18 basis points higher to 678 basis points, the most since Bloomberg began gathering the data in 1997. Italian 10-year yields rose six basis points to 4.81 percent after the government sold 8.3 billion euros ($12 billion) debt. Spain is due to sell debt on June 2.
Russia Ban
Oil for July delivery slipped to $100.38 a barrel in New York, and copper for July delivery dropped 0.5 percent. Milling wheat futures tumbled 4.9 percent after Russia said on May 28 it will let a grain-export ban expire July 1, increasing supply as drought and flooding threatens crops in Europe and the U.S. Markets in the U.K. were closed for a public holiday today.
Seventeen stocks advanced for every sixteen that declined in the Stoxx 600. EON and RWE, Germany’s largest utilities, fell 2.3 percent and 1.7 percent, respectively, after Merkel’s coalition said it will maintain a tax on nuclear plants while phasing out the power source. RWE shares declined to the lowest level since December 2004.
Alternative-energy stocks gained. Vestas Wind Systems A/S, the largest wind-turbine manufacturer, climbed 2.7 percent and Renewable Energy Corp. gained 3.7 percent.
U.S. stock exchanges and the Treasury market were closed for the Memorial Day holiday. Standard & Poor’s 500 Index futures expiring in June rose 0.1 percent. The gauge rallied for a third day on May 27, paring its weekly loss to 0.2 percent. Its four-week slump was the longest since February 2010.
Payrolls probably rose 185,000 in May, slowing from a 244,000 gain in April, according to the median forecast in a Bloomberg News survey before Labor Department figures June 3. A separate survey showed the Institute for Supply Management’s factory index likely fell to 57.6 this month, the lowest level since October.
Brazilian stocks slumped, breaking a four-day winning streak for the Bovespa index, which lost 0.5 percent. A report showed lending in Brazil expanded in April, spurring speculation that policy makers haven’t done enough to curb inflation.
--With assistance from John Deane, Mark McCord and Andrew Rummer in London and Matt Walcoff in Toronto. Editors: Stephen Kirkland, Nick Baker
To contact the reporter on this story: Shiyin Chen in Singapore at schen37@bloomberg.net
To contact the editor responsible for this story: Nick Baker at nbaker7@bloomberg.net.
