The pound strengthened after Bank of England Governor Mervyn King said policy makers aren’t trying to weaken the currency. European stocks fell from their highest levels since 2008 before U.S. reports on factory output and consumer confidence.
Sterling appreciated 0.6 percent to $1.5166 at 8:40 a.m. in New York. South Korea’s won weakened for a seventh day on concern policy makers around the world are stepping up efforts to influence currency markets. The Stoxx Europe 600 Index fell 0.3 percent and Standard & Poor’s 500 Index (SPX) futures swung between gains and losses after the gauge closed yesterday within two points of a record. Natural gas rose to the highest since November after U.S. stockpiles retreated to the lowest level in almost two years.
Markets determine the level of exchange rate, “not us,” King said in an interview with ITV News yesterday. U.S. industrial production probably rose 0.4 percent in February after shrinking a month earlier and a University of Michigan index may show consumers grew more optimistic in March, economists said before reports today.
“It all comes down to a market that has become totally hooked on what central bankers have to say,” said Neil Mellor, a foreign-exchange strategist in London at Bank of New York Mellon Corp., the world’s largest custody bank. “King caught the market off guard.”
The pound strengthened against all 16 of its major peers, extending yesterday’s 1.1 percent advance against the dollar, its biggest jump since July. It’s weakened 6.7 percent versus its U.S. counterpart this year.
The euro climbed 0.7 percent to $1.3096 while the yen was little changed at 96 per dollar. European Union leaders meet for a second day in Brussels after endorsing moves that may allow countries more time to bring down deficits.
Japan’s political parties confirmed Haruhiko Kuroda as the next BOJ governor as well as Kikuo Iwata and Hiroshi Nakaso as deputies, ushering in officials who will push for more stimulus.
The won weakened 0.2 percent to 1,110.95 per dollar, headed for a weekly decline after the central bank left interest rates unchanged yesterday and officials said the value of yen, which has lost almost 10 percent against the dollar this year, poses a threat to the economy.
Spain’s 10-year bond yield was little changed at 4.87 percent, up from 4.76 percent at the end of last week.
Bank of Ireland is selling 500 million euros ($650 million) of five-year covered bonds just two days after the government completed a 5 billion-euro fundraising. The cost of insuring against losses on the sovereign bonds fell 0.25 basis point to 168.5 in the market for credit-default swaps.
The Stoxx 600 (SXXP) has risen 0.8 percent this week, on course for a fourth straight week of gains. Rentokil Initial Plc rallied 11 percent, the biggest jump since 2009, after the world’s largest pest-control company reported an increase in fourth-quarter adjusted pretax profit. Bwin.Party Digital Entertainment Plc dropped 5.7 percent after the gambling company forecast 2013 revenue that trailed analyst estimates.
U.S. equity-index futures were little changed. The 30-stock Dow average reached another all-time high and extended its gains to a 10th straight day. Bank of America Corp. advanced 3.8 percent in pre-market New York trading today as the second- largest U.S. lender won Federal Reserve approval to buy back as much as $5 billion in stock.
Manufacturing in the New York region expanded for a second month in March, with the Federal Reserve Bank of New York’s general economic index easing to 9.2 this month from 10 in February. A Fed report at 9:15 a.m. in Washington may show U.S. industrial production climbed 0.4 percent in February after a 0.1 percent drop the previous month, according to a Bloomberg survey of 83 economists. The Thomson Reuters/University of Michigan preliminary index of consumer sentiment for March climbed to 78 from 77.6 last month, a separate survey predicted.
Natural gas futures advanced as much as 2.2 percent to $3.897 per million British thermal units on the New York Mercantile Exchange.
The MSCI Emerging Markets Index (MXEF) fell for a fifth day, the longest losing streak in four months, dropping 0.2 percent. India’s Sensex index lost 0.7 percent as lenders declined after the central bank said it’s “collecting information” on reports of money laundering. Russia’s Micex Index gained 0.5 percent and banks led a 1.6 percent rally in Turkey’s benchmark gauge, which rebounded from a one-week low.
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