Bloomberg News

Stocks Decline, Swiss Franc Gains Before Payrolls; Copper Falls

September 02, 2011

Sept. 2 (Bloomberg) -- Stocks in Europe and Asia declined, U.S. futures fell and the Swiss franc strengthened before an American jobs report that may show unemployment exceeded 9 percent. Copper slid for a second day and grains rose.

The MSCI All-Country World Index lost 0.8 percent as of 9:42 a.m. in London. The Stoxx Europe 600 Index fell 1.9 percent and futures on the Standard & Poor’s 500 Index retreated 0.8 percent. The Swiss franc gained against all 16 of its major counterparts. Copper and nickel declined more than 0.6 percent, and corn rose 1.2 percent. Ten-year Treasury note yields were little changed at 2.13 percent.

The benchmark for global equities fell for a second day, paring gains from the biggest weekly advance in two months. Data today from the U.S. Labor Department may show that employers added fewer workers in August and economists’ estimates indicate Germany will report next week factory orders fell for the first time in four months. Goldman Sachs Group Inc. and Societe Generale SA cut U.S. jobs forecasts yesterday.

“The U.S. recovery remains anemic, with lingering concerns over job creation and house prices,” said Tim Schroeders, who helps manage $1 billion in equities at Pengana Capital Ltd. in Melbourne. “Expectations are relatively low for tonight’s jobs data.”

The S&P 500 slumped 1.2 percent yesterday. The U.S. equity benchmark is up 2.4 percent in the past four trading days.

‘Out of Favor’

UBS AG reduced its year-end estimate for the MSCI Asia excluding Japan Index to 580 from 670, citing that equities remain “broadly out of favor” amid slowing economic growth. The stock gauge slipped 0.9 percent to 510.81.

The MSCI Asia Pacific Index, which includes Japan, lost 1.1 percent, falling for the first time in seven days. The gauge is down 9.9 percent in 2011. The Nikkei 225 Stock Average of Japan shares dropped 1.2 percent and Australia’s S&P/ASX 200 lost 1.5 percent today.

Honda Motor Co., Japan’s No. 2 automaker by market value, slumped 2 percent after saying U.S. sales declined 24 percent in August. Toyota Motor Corp., the country’s biggest car producer, sank 1.6 percent. Its U.S. sales fell 13 percent.

Japanese companies unexpectedly cut spending in the second quarter, fanning concern the nation’s recovery is stalling. Capital spending excluding software fell 8.2 percent from a year earlier in the three months ended June 30, the Ministry of Finance said today. Economists surveyed by Bloomberg forecast a 0.7 percent increase.

Franc, Yen

The Swiss franc and yen strengthened after Asian stocks declined and the New York Times reported that the U.S. may sue banks for misrepresenting the quality of securities backed by home loans, citing three people briefed on the matter. The franc advanced 1.2 percent to 1.1207 per euro. The yen rose 0.1 percent to 76.83 per dollar.

“The possibility that banks may be sued over mortgages appears to be fueling risk aversion,” said Lee Wai Tuck, a currency strategist at Forecast Pte in Singapore. “This, in turn, is causing haven currencies such as the Swiss franc and the yen to be bought.”

The euro was set for the biggest weekly drop against the dollar in almost two months. The 17-nation currency slid versus most of its 16 major counterparts in the past five days before the European Central Bank holds a policy meeting on Sept. 8. It traded at $1.4239 from $1.4259 in New York yesterday.

Copper, Corn

Three-month delivery copper on the London Metal Exchange dropped 0.9 percent to $9,061.50 a metric ton, paring a second weekly gain, on concern about slowing global economic growth. Euro-area manufacturing contracted more than initially estimated in August while Chinese manufacturing growth stayed near a 29- month low, purchasing managers’ indexes showed yesterday. Nickel fell 0.9 percent to $21,547 a ton and zinc declined 1 percent to $2,216.

Corn for December delivery climbed 1.2 percent to $7.47 a bushel on the Chicago Board of Trade, rebounding from the biggest drop in two months yesterday, on expectations that the hottest July temperatures in the Midwest since 1955 will reduce U.S. yields. Wheat for December delivery increased 0.9 percent to $7.675 a bushel.

Oil futures headed for a second weekly gain as a tropical depression formed in the Gulf of Mexico, shutting production platforms. Contracts expiring in October lost 0.8 percent to $88.19 a barrel. The futures are up 3.3 percent this week.

Yields on 10-year Treasury notes fell nine basis points to 2.13 yesterday, the biggest drop since Aug. 18. Treasuries returned 2.8 percent in August, the biggest monthly advance since the depths of the financial crisis in December 2008.

--With assistance from Katrina Nicholas in Singapore, Phoebe Sedgman in Wellington and Chanyaporn Chanjaroen in London. Editors: Richard Dobson, Darren Boey

To contact the reporter on this story: Lynn Thomasson in Hong Kong at lthomasson@bloomberg.net

To contact the editor responsible for this story: Richard Dobson at rdobson4@bloomberg.net


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