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Most European Stocks Climb With Oil as Yen Drops to 28-Month Low

Published: December 28, 2012 | 9:01 am
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Most European stocks climbed and oil advanced before U.S. congressional and House meetings that may lead to a budget agreement. The Japanese yen weakened to the lowest since August 2010 on stimulus bets.

The Stoxx Europe 600 Index gained 0.1 percent as of 8:13 a.m. in London. The S&P GSCI Index of 24 commodities added 0.4 percent as crude rose 0.5 percent to $91.33 a barrel in New York. Standard & Poor’s 500 Index futures were little changed. The yen dropped 0.2 percent to 86.29 a dollar, helping to lift Japanese stocks to the biggest yearly increase since 2005.

U.S. congressional leaders plan to meet with President Barack Obama today and House Republicans said they will convene Dec. 30 as lawmakers seek to avoid more than $600 billion in spending cuts and tax gains that will start in January. Industrial output in Japan declined more than economists expected in November, bolstering the case for Prime Minister Shinzo Abe to push for further monetary easing.

“With U.S. President Barack Obama having reportedly cut his holiday short and returning to Washington to meet U.S. leaders for last ditch talks, there is growing optimism that a deal can be knocked before the deadline,” Stan Shamu, a market strategist at IG Markets in Melbourne, wrote in an e-mail.

Japan’s currency touched 86.64 a dollar earlier, the lowest level in more than 28 months. The currency has tumbled 15 percent this year, the biggest drop among the 10 developed- market currencies tracked by Bloomberg Correlation-Weighted Indexes.

Yen Forecasts
JPMorgan Chase & Co. revised its yen projections today, saying the currency will fall to 90 against the dollar in the second quarter next year. Its previous estimate was 83. Nomura Holdings Inc. also reduced its forecast to 90 per dollar for the same period from 85.

“Policy expectations are behind the continuous decline in the yen,” said Noriaki Murao, managing director of the marketing group in New York at the Bank of Tokyo-Mitsubishi UFJ Ltd. “The Abe administration gives priority to measures against deflation and a stronger yen.”

Government reports today showed Japan’s industrial output slid 1.7 percent last month from October, worse than all 27 estimates in a Bloomberg News survey that had a median forecast of a 0.5 percent decline. Consumer prices excluding fresh food fell 0.1 percent in November from a year earlier.

Abe’s cabinet is working on a plan to fight against a strong yen, the Nikkei newspaper said. Proposals include the use of currency intervention when needed, the paper said.

Budget Talks
About three stocks rose for every two that fell on the Stoxx Europe 600 Index. The gauge is headed for a 15 percent gain in 2012.

Standard & Poor’s 500 Index futures gained as much as 0.4 percent earlier today after Senator Dick Durbin said Obama will meet with Democratic and Republican leaders of the House and Senate. U.S. stocks yesterday pared losses as House Republican leaders announced the Dec. 30 chamber meeting, its first Sunday session in more than two years.

The MSCI Asia Pacific Index (MXAP) gained 0.5 percent, with about two stocks rising for each that fell. The benchmark was headed for a 14 percent gain this year, the most since 2010.

Australia’s S&P/ASX 200 Index rose 0.5 percent, set for the biggest year of gains since 2009. The Shanghai Composite Index was up 1.2 percent. The Nikkei 225 climbed 0.7 percent in its fourth day of gains for a 23 percent annual increase.

Benchmark stock indexes for all countries in the Asia Pacific except Sri Lanka have gained this year.

Today is the final trading day of the year in Japan, South Korea, Taiwan, Indonesia, Thailand, Vietnam and the Philippines. Hong Kong, Australia, New Zealand and Singapore will trade for part of the day on New Year’s Eve.

Benchmark U.S. 10-year yields were little changed at 1.73 percent. Treasuries lagged behind stocks this year by the most since 2009, with equities returning eight times more than bonds.

Wheat in Chicago rebounded from the lowest price in more than five months as rains delayed harvesting in Argentina, South America’s biggest producer. March-delivery futures rose 0.8 percent to $7.7825 a bushel from the low yesterday of $7.645. Soybeans gained 0.7 percent.

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