European Stocks Gain With Asia as Bonds Slide; Won Climbs

Frankfurt (Aug 11) European and emerging-market stocks advanced while bond risk fell with Brent oil as tension eased in Ukraine and the U.S. showed signs of pushing back militants in Iraq. The euro weakened.

The Stoxx Europe 600 Index advanced 1.2 percent at 7:26 a.m. in New York as Standard & Poor’s 500 Index futures added 0.5 percent. The MSCI Emerging Markets Index rose 1.1 percent. Brent fell 0.1 percent. Measures of European corporate credit risk dropped for a second day. German and U.K. bonds ended a three-day advance. The euro retreated against all of but two of its 16 major peers. The U.S. two-year note yield was little changed at 0.45 percent after falling to an eight-week low on Aug. 8.

U.S. equities rallied on Aug. 8 after Russia said warplanes ended drills near Ukraine. Israel and militants in the Gaza Strip agreed to an Egyptian-brokered truce. Using fighter jets and drones, the U.S. destroyed several armed trucks and a mortar position held by Iraqi militants, the U.S. Central Command in Tampa, Florida, said yesterday.

“The ending of Russian military exercises near Ukraine is contributing to a rally in global equities,” said Alvin T. Tan, the director of foreign-exchange strategy at Societe Generale SA in London. “The drop in short-term interest rates in the U.S. recently has been supporting global risk sentiment and specifically U.S. equity markets. If Iraq militants can be forced back, that is also a good thing.”

U.S. Stocks

S&P 500 futures are signaling U.S. stocks will extend gains after rallying 1.2 percent on Aug. 8. MannKind Corp. surged 23 percent in pre-market New York trading after Sanofi agreed to pay the drugmaker as much as $925 million for rights to the world’s only available inhaled insulin. Kinder Morgan Inc. rallied 14 percent after announcing plans to consolidate its energy businesses.

More than 14 stocks climbed for every one that dropped on the Stoxx 600. Banco Popolare SC rallied 8.4 percent after the Italian lender unexpectedly reported a second-quarter profit. The bank lowered its operating costs by reducing its spending on staff and administration.

Balfour Beatty Plc gained 2.8 percent after the British construction company rejected a revised merger proposal from Carillion Plc. Balfour Beatty said a deal between the two could undermine its sale of Parsons Brinckerhoff, its New York-based infrastructure-consulting business.

Emerging Markets

The MSCI Emerging Markets Index rebounded from a six-week low as benchmark gauges from China and the Philippines to Russia, Poland and South Africa advanced more than 1 percent. Chinese inflation held below the government’s goal in July, data showed over the weekend.

Russia’s Micex Index jumped 1.9 percent as OAO Sberbank and VTB Group climbed more than 3.7 percent. MSCI Inc. said it kept country’s biggest banks in its Russia gauge after the U.S. and European Union imposed sanctions blocking the purchase of new bonds or stocks issued by the lenders.

Turkish stocks and the lira retreated after Prime Minister Recep Tayyip Erdogan won the country’s first direct presidential election, with 51.8 percent of the vote and enough to avoid a run-off, according to preliminary results show. The lira weakened 0.2 percent against the dollar and the Borsa Istanbul 100 index of shares fell 1 percent.

The Hang Seng China Enterprises Index (HSCEI) of mainland companies listed in Hong Kong advanced 1.9 percent, the most since July 23. The Shanghai Composite Index added 1.4 percent. The consumer price index rose 2.3 percent from a year earlier, the National Bureau of Statistics said, the same pace as in June and also the median estimate in a Bloomberg News survey.

Source: Bloomberg