European Stocks, U.S. Futures Gain; Yen Slips From Postwar High
March 17 (Bloomberg) -- European stocks advanced, ending a six-day slide, and U.S. futures climbed on speculation Group of Seven officials will act to calm markets roiled by Japan's nuclear disaster. The yen touched a post-World War II record before retreating.
The Stoxx Europe 600 Index gained 0.8 percent at 9:52 a.m. in London, and futures on the Standard & Poor's 500 Index rose 1 percent. The yen appreciated 0.7 percent to 79.02 per dollar after strengthening to 76.36, while the euro advanced 0.7 percent to $1.3994. The yield on the 10-year Treasury note increased five basis points to 3.22 percent, ending three days of declines. Oil rallied 1.6 percent amid fighting in Libya.
Japanese Finance Minister Yoshihiko Noda told reporters G-7 officials will meet tomorrow and discussions on the impact of the March 11 earthquake will encompass currencies, fueling speculation policy makers will delay any intervention to limit the yen's advance. More than 300 workers are racing to prevent a meltdown and a spread of radiation at the Fukushima Dai-Ichi power station, an increase from a core group of 50 engineers yesterday, Tokyo Electric Power Co. said.
"How the Japanese authorities manage the nuclear crisis is the obvious near term factor but if another surge in yen buying is triggered the Japanese authorities would not hesitate to stem gains," Derek Halpenny, European head of currency research at Bank of Tokyo-Mitsubishi UFJ Ltd. in London, said in a note today.
Stocks Advance in Europe
Ten stocks advanced for each that fell in the Stoxx Europe 600 after the index's valuation reached the cheapest since 2008 yesterday on a reported-earnings basis. Allianz SE led gains among insurers after a gauge of the industry's shares slid to a two-month low yesterday. The increase in S&P 500 futures indicated the benchmark measure for U.S. stocks will snap a three-day losing streak. Japan's Nikkei 225 Stock Average lost 1.4 percent, after earlier tumbling 5 percent.
The VStoxx Index, which measures the cost of insuring against declines in the Euro Stoxx 50 Index, slipped 4 percent, retreating from the highest level since July. The VIX, as the Chicago Board Options Exchange Volatility Index is known, jumped 21 percent yesterday.
The cost of debt insurance for Tokyo Electric, battling to prevent a radiation catastrophe at Fukushima, 220 kilometers (135 miles) north of Tokyo, rose 34 basis points to 388, according to CMA. Contracts protecting Japanese government bonds were little changed near a record-high of 118 basis points.
Industrial Production
The Treasury 30-year bond yield rose three basis points before a report that will probably show industrial production increased in February for a third month in the past four. Output at factories, mines and utilities climbed 0.6 percent after a 0.1 percent decrease in January, according to the median forecast in a Bloomberg News survey. Other data may show inflation excluding food and energy was contained, factories in the Philadelphia region expanded and an index of the economy's outlook climbed for the eighth month.
The yen strengthened against all 16 of its most-traded peers, rising 2.4 percent versus the New Zealand dollar and 1.1 percent against the South Korean won. The Japanese currency jumped 4.5 percent versus the dollar in 26 minutes as markets closed in New York and opened in Asia, according to data compiled by Bloomberg.
Yen Strengthens
The yen strengthened amid "very illiquid conditions" after the New York close at 5 p.m. as stop-loss orders overwhelmed bids for the dollar, Carl Forcheski, a director on the corporate currency sales desk at Societe Generale SA in New York, wrote in a note.
One-month implied volatility on options for the dollar-yen surged as much as 42 percent to 20.10, the highest since March 2009. Volatility was at 8.50 on March 10, a day before the magnitude-9.0 earthquake hit. Implied volatility is a measure of expected price swings and the key gauge for option prices.
Oil for April delivery increased to $99.55 a barrel on the New York Mercantile Exchange, reversing an earlier decline of as much as 1.4 percent. Libyan leader Muammar Qaddafi's warplanes bombed Benghazi's airport, rebels said, bringing the war to the opposition capital for the first time since loyalist forces were driven out of the city last month.
Copper for delivery in three months rose 1 percent to $9,350 a metric ton on the London Metal Exchange, leading gains in industrial metals. Wheat for May delivery advanced 2.1 percent to $6.76 a bushel in Chicago trading. Soybeans and corn also climbed.
The MSCI Emerging Markets Index slipped 0.7 percent. The Shanghai Composite Index slid 1.1 percent, and India's Sensitive Index retreated 1.3 percent after the Reserve Bank of India raised interest rates for the eighth time in a year. Russia's Micex Index jumped 0.8 percent as oil rebounded.
"The situation in Japan is getting worse and foreign governments are evacuating their people from Tokyo," said Thomas Harr, Singapore-based head of Asian foreign-exchange strategy at Standard Chartered Plc. "The developments in Japan are very negative for emerging Asia, especially for Northeast Asia due to the growth impact and economic impact."
To contact the reporter on this story: Stephen Voss in London at sev@bloomberg.net
To contact the editor responsible for this story: Stephen Voss at sev@bloomberg.net
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