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Europe Stock Futures, Euro Climb on Greece Optimism; Oil Rallies

Published: May 28, 2012 | 7:42 am
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European equity futures and Asian stocks rallied and the euro strengthened for the first time in five days after opinion polls of Greek voters eased concern that the country will exit the euro zone. Oil and copper rose.

Euro Stoxx 50 Index futures gained 1 percent at 7:01 a.m. in London, while those for the Standard & Poor’s 500 Index futures added 0.9 percent. The MSCI Asia Pacific Index advanced 0.6 percent, rebounding from a five-month low. The euro climbed 0.7 percent to $1.2602 while the Dollar Index, which tracks the currency against six U.S. trading partners, fell 0.6 percent, and was poised for the biggest drop in six weeks.

Greece’s New Democracy, which supports the European Union’s bailout plan, was placed first in all six opinion polls published on May 26 as campaigning continued for next month’s general election. The MSCI Asia Pacific Index has tumbled 10 percent in May, heading for the biggest monthly drop since October 2008. More than $4 trillion was erased from the value of global equities in the first three weeks of the month on concern Greece will abandon the euro.

“There will be no exit by Greece,” said Binay Chandgothia, a Hong Kong-based portfolio manager at Principal Global Investors, which manages $250 billion globally. “If they take structurally positive steps, things will be all right in the long run,” he said in a Bloomberg Television interview.

Antonis Samaras, the leader of Greece’s New Democracy party, sought to sketch out the consequences of a euro exit, saying Greek incomes, bank deposits and property values would lose at least half their value within days, while food prices would rise by a quarter. The euro climbed from its lowest level since July 2010 as data showed trader bets for a decline in the currency reached a record high.

Euro Bets

Hedge funds and other large speculators increased wagers the euro will drop versus the dollar to 195,361 contracts in the period ended May 22, the most on record going back to 1999, data from the Commodity Futures Trading Commission show.

The yen was up 0.4 percent, rising for the first time in three days against the dollar after minutes from the Bank of Japan’s April 27 meeting damped speculation the bank will boost monetary easing to achieve its 1 percent inflation goal. The South Korean won gained 0.9 percent.

Treasury futures fell, eroding gains made at the end of last week. Ten-year futures contracts for June delivery slid 6/32, or $1.88 per $1,000 face amount, to 133 18/32. U.S. financial markets are closed today for the Memorial Day holiday.

Copper for three-month delivery advanced for a third day, rising 1.3 percent to $7,735 a metric ton on the London Metal Exchange. Oil in New York rose 1 percent to $91.74 a barrel. Prices are down 13 percent this month.

Chinese Profits

The Shanghai Composite Index rose 0.3 percent after falling as much as 1 percent earlier. Chinese industrial companies’ profits fell in April, a government report showed, as the nation’s slowing economy curbed demand. Earnings slid 2.2 percent from a year earlier to 407.6 billion yuan ($64.3 billion), the National Bureau of Statistics said.

The Hang Seng China Enterprises Index added 1.1 percent and Australia’s S&P/ASX 200 Index gained 1 percent.

Renesas Electronics Corp., the world’s biggest maker of microcontrollers for cars, sank 10 percent after a person briefed on the matter said it plans to raise 100 billion yen ($1.3 billion) and eliminate more than 10,000 jobs.

The cost of protecting Asia-Pacific bonds from default dropped, according to traders of credit-default swaps. The Markit iTraxx Asia index of 40 investment-grade borrowers outside Japan declined 2 basis points to 197 basis points, Credit Agricole SA prices show. The index is headed for its lowest close since May 22, according to CMA.


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