|European Stocks, Commodities Drop on China, Friday, 13 Apr 2012|
(Bloomberg) European stocks fell for the first time in three days, commodities slid and Treasuries gained as China reported slower-than-expected economic growth. The won strengthened after a failed rocket launch by North Korea. The Stoxx Europe 600 Index retreated 0.8 percent as of 9:48 a.m. in London, heading for a fourth straight week of losses. Standard & Poor's 500 Index futures declined 0.5 percent. The S&P GSCI (SPGSCI) gauge of 24 raw materials slipped 0.4 percent, as oil in New York fell 0.6 percent and copper dropped 1.5 percent. The yield on the 10-year Treasury note fell two basis points to 2.03 percent. South Korea's won strengthened against 14 of 16 major counterparts and the Australian dollar lost 0.6 percent.
China said its gross domestic product increased 8.1 percent in the first quarter, the smallest gain since mid-2009 and less than the 8.4 percent growth predicted in a Bloomberg survey. North Korea launched a rocket, which broke up and fell into the sea, in defiance of international pressure including U.S. warnings that doing so would nullify a food aid deal. Reports today may show U.S. inflation eased and consumer confidence remained at the highest level in more than a year. "China's GDP is the major driver," said Marius Daheim, a senior fixed-income strategist at Bayerische Landesbank in Munich. "Market players are generally quite jittery about China, a major global growth engine, losing steam, so even minor downside surprises can trigger price shifts."
European Stocks Slide
The Stoxx 600 (SXXP) has dropped 1.3 percent this week and is on course for the longest stretch of weekly declines since August. Cap Gemini SA, France's biggest computer-services company, fell 3.6 percent, leading technology shares lower. Infosys Ltd., India's second-largest software services exporter, plunged 10 percent in Mumbai as its sales forecast missed estimates. L'Oreal SA (OR), the world's largest cosmetics maker, surged 2.7 percent to a four-year high after reporting quarterly sales that beat analysts' projections.
The retreat in S&P 500 futures indicated the U.S. equities gauge will extend this week's 0.8 percent drop. Google Inc. increased 0.6 percent in German trading as the world's biggest Internet-search company reported first-quarter profit that topped estimates. JPMorgan Chase & Co. and Wells Fargo & Co. are scheduled to report earnings today and 91 companies in the S&P 500 will announce results next week. Per-share profit growth for companies in the U.S. equity benchmark is projected to have slowed to 0.8 percent in the first quarter, according to analyst estimates compiled by Bloomberg.
A Labor Department report at 8:30 a.m. in Washington may show U.S. consumer prices rose 0.3 percent last month after climbing 0.4 percent in February, according to the median estimate in a Bloomberg survey of economists. The Thomson Reuters/University of Michigan's preliminary index of consumer sentiment probably held at 76.2 in April, the highest since February 2011, projections show. Oil declined to $103.07 a barrel and copper slipped to $8,097 a metric ton. China is the biggest buyer of the metal and largest energy consumer. Natural gas was little changed at $1.984 per million British thermal units after yesterday falling to a 10-year low of $1.971. The 30-year Treasury bond yield dropped three basis points to 3.18 percent. Federal Reserve Chairman Ben S. Bernanke and Fed Bank of New York President William C. Dudley are scheduled to speak today.
The won gained 0.5 percent to 1,135 per dollar and South Korea's Kospi Index (KOSPI) increased 1.1 percent. South Korea's central bank will closely monitor stocks, bonds and currency markets following North Korea's rocket launch, Deputy Governor Park Won Shik said at an emergency meeting in Seoul. The U.S. military said it tracked the rocket, which was "assessed to have failed" and fell harmlessly into the sea. North Korea state media confirmed the failure and said it was under investigation. "Investors are just shrugging off this launch," said Im Jeong Jae, a Seoul-based fund manager at Shinhan BNP Paribas Asset Management Co., which oversees about $28 billion. "The news came out before the market opened that the rocket launch failed, so investors didn't have to worry about it."
The Australian dollar weakened 0.6 percent against the U.S. currency, with the euro 0.2 percent lower versus the greenback. The MSCI Emerging Markets Index (MXEF) rose 0.8 percent, paring what is set to be its fourth consecutive weekly loss to 0.3 percent. The Hang Seng China Enterprises Index (HSCEI) of Chinese stocks listed in Hong Kong jumped 2.6 percent and the Shanghai Composite Index (SHCOMP) gained 0.4 percent as bank lending surged and as slower-than-forecast economic growth gave the government more scope to loosen monetary policy. Russia's Micex Index (MICEX) gained 0.5 percent and the ISE National 100 Index (XU100) rose 0.3 percent in Turkey.
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