European Stocks Advance With Copper as Gold Declines Before Fed
FRANKFURT (Sept. 18) European stocks rose with industrial metals while gold fell to the lowest level in almost six weeks before the Federal Reserve decides whether to slow $85 billion of monthly asset purchases. Oil and the pound advanced.
The Stoxx Europe 600 Index rose 0.5 percent to 313.46 at 10:50 a.m. in London. Standard & Poor’s 500 Index futures added 0.2 percent. Copper climbed 0.6 percent and lead jumped 1.3 percent. West Texas Intermediate oil advanced 0.7 percent and bullion declined for a third day. Treasuries and the Bloomberg U.S. Dollar Index were little changed. The pound strengthened to an eight-month high versus the dollar. Corporate bond risk fell to the lowest in almost four months.
Analysts are divided on the amount by which the Fed will scale back its monthly asset purchases. Among 64 economists surveyed by Bloomberg News, 33 predict it will reduce its buying of Treasuries by $5 billion or less, with 31 forecasting a cut of $10 billion or more. The Federal Open Market Committee concludes a two-day meeting today as data is forecast to show housing starts in the U.S. rose in August from a month earlier.
“The whole environment for growth does seem to have deteriorated slightly since June when the Fed last really spoke to the market,” Lucy MacDonald, chief investment officer for equities at Allianz Global Investors in London, which has the equivalent of about $419 billion under management worldwide, told Mark Barton on Bloomberg Television. “If they don’t do anything at all that may raise questions and people will be more concerned about growth. Clearly we need to have the comfort that the economic recovery is still well underpinned.”
The Stoxx 600 rebounded from yesterday’s 0.5 percent decline. Zodiac Aerospace SA, the world’s largest maker of airline seats, rallied 4.5 percent in Paris trading after full- year sales increased and Bank of America Corp. upgraded its recommendation on the shares.
“Any sort of announcement, whether its zero tapering or $5 billion or $10 billion is going to have an effect on the market,” Nick Maroutsos, the managing director and co-founder of Kapstream Capital Ltd., which oversees about $5 billion, said by phone from Sydney. “What we do know is that it’s going to be a very, very gradual withdrawal of stimulus. We are bullish on equities.”
The gain in S&P 500 futures indicated the U.S. gauge will extend a six-week high. A Commerce Department report at 8:30 a.m. in Washington may show new-home construction climbed for a second month in August. Housing starts rose 2.3 percent to a 917,000 annualized rate, according to the median forecast in a Bloomberg survey of economists.