Bloomberg News

Stocks Advance as Greek Concern Eases; Dollar, Treasuries Fall

June 30, 2011

June 30 (Bloomberg) -- Stocks rose, giving the Standard & Poor’s 500 Index its biggest four-day gain since September, and the Dollar Index posted its fourth straight loss after the Greek parliament supported a European bailout and a measure of U.S. business activity improved. Treasuries fell.

The S&P 500 rose 1 percent to 1,320.64 at 4 p.m. in New York, trimming its quarterly drop to 0.4 percent. The MSCI All- Country World Index jumped 1.3 percent. The Dollar Index slid 0.4 percent as the euro climbed to the highest level in nearly three weeks against the U.S. currency. The 10-year Treasury yield increased five basis points to the highest level this month, while the Greek yield added six basis points. Corn and wheat tumbled. Oil advanced 0.7 percent to a two-week high.

Greek Prime Minister George Papandreou gained approval today from lawmakers to implement his 78 billion-euro ($113 billion) package of budget cuts and asset sales after winning parliamentary backing yesterday for the bill. Germany’s biggest banks and insurers and the government agreed on a proposal to reinvest money from maturing debt holdings into new Greek bonds through 2014. The Institute for Supply Management-Chicago Inc. said its business barometer unexpectedly rose in June.

“There are nice things coming together,” said James Paulsen, chief investment strategist at Minneapolis-based Wells Capital, which oversees $340 billion. “Europeans are kicking the can down the road a bit further. It seems that the Greece situation is closer to being put on the back burner. The bottom- line is whether or not we recover from the soft patch. Most reports indicate that the economic softness has been only temporary.”

Quarterly Loss

The MSCI All-Country World Index of shares in 45 countries lost 1.5 percent in June including the reinvestment of dividends, resulting in the first quarterly loss in a year. Bank of America Merrill Lynch’s Global Broad Market Corporate Index slumped 0.6 percent through yesterday, while another index showed Treasuries fell 0.1 percent. The S&P’s GSCI Total Return Index of 24 commodities declined 5.3 percent, pushing prices down in the quarter for the first time in a year.

The S&P 500 fell 1.8 percent in June for its second straight monthly decline, amid concern about the European debt crisis and weaker-than-expected economic data. The benchmark index for U.S. stocks has still gained 5 percent for the first half of the year on government stimulus measures and better- than-estimated company profits.

Caterpillar, 3M

The Dow Jones Industrial average erased its losses for the quarter, posting a 0.8 percent advance for the three months as Caterpillar Inc., United Technologies Corp. and 3M Co. climbed at least 1.8 percent today. U.S. equities rallied as investors gravitated toward industries tied to economic growth. Industrial, raw-materials and technology shares gained the most among 10 groups in the S&P 500 today.

Stocks extended their gains after consumer confidence rose to the highest level in 10 weeks, as falling gasoline prices provided relief to Americans contending with 9.1 percent joblessness, according to the Bloomberg Consumer Comfort Index.

The Stoxx Europe 600 Index added 1.1 percent, trimming its loss for the quarter to 1.1 percent. The MSCI Asia Pacific Index rose 1.3 percent, paring a quarterly drop to 0.6 percent.

The euro, which beat 15 of 16 major currencies in the first half, rose 0.5 percent to $1.4502. It touched the highest level in almost three weeks on prospects the European Central Bank will increase interest rates next week to curb inflation. The U.S. currency weakened against 13 of its 16 counterparts, losing 0.3 percent versus the yen. The dollar has declined against all but South Africa’s rand in the first six months of the year.

Treasuries Slide

The 10-year Treasury note slid for a fourth straight day, its longest losing streak since February, as the Federal Reserve prepared to conclude a $600 billion program of debt buying, known as quantitative easing, or QE2. The benchmark’s yield gained five basis points to 3.16 percent.

The difference in yield between Greece’s 10-year bond and benchmark German bonds edged up one basis point to 1,332 basis points. The spread reached a record 1,543 basis points, or 15.43 percentage points, on June 17. The yield on the 10-year Spanish bond declined 13 basis points, with the similar-maturity Italian yield seven basis points lower. Corn futures tumbled 4.6 percent, the most since November, and wheat plunged 8.9 percent to an 11-month low as the government reported U.S. grain acreage and inventories that topped estimates by analysts.

Oil Rally

Crude oil climbed 0.7 percent to $95.42, adding to a two- day rally of 4.5 percent and recouping all of the losses since the International Energy Agency said June 23 that members would tap emergency reserves. The S&P GSCI index of 24 commodities fell 0.4 percent.

The MSCI Emerging Markets Index increased 1.2 percent, paring its second-quarter decline to 2.1 percent. China’s CSI 300 Index rose 1.5 percent as BYD Co., the automaker part-owned by Warren Buffett’s Berkshire Hathaway Inc., jumped 41 percent on its trading debut in Shenzhen. South Korea’s won strengthened 0.5 percent against the dollar as industrial production growth beat economists’ forecasts.

--With assistance from Shiyin Chen in Singapore and Claudia Carpenter, Abigail Moses, Michael Patterson, Andrew Rummer, Daniel Tilles and Alexis Xydias in London. Editors: Jeff Sutherland, Nick Baker

To contact the reporters on this story: Stephen Kirkland in London at skirkland@bloomberg.net; Rita Nazareth in New York at rnazareth@bloomberg.net

To contact the editor responsible for this story: Nick Baker at nbaker7@bloomberg.net


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