By Shiyin Chen and Ron Harui
June 15 (Bloomberg) -- The euro weakened for the first time in three days against the dollar, while stocks and oil retreated as European Union officials struggled to break a deadlock on a second Greek rescue plan. Treasuries gained.
Europe?s 17-nation currency fell 0.5 percent to $1.4362 as of 4:08 p.m. in Tokyo. The MSCI World Index lost 0.3 percent, the Stoxx Europe 600 Index slipped 0.1 percent, while China?s Shanghai Composite Index sank 0.9 percent. Standard & Poor?s 500 Index futures dropped 0.4 percent and yields on 10-year Treasuries declined two basis points. Crude slid 0.8 percent in New York. Copper decreased 0.4 percent in London.
An emergency session of finance ministers in Brussels late yesterday failed to reconcile a German-led push for bondholders to shoulder part of the cost of a new Greek aid package with European Central Bank warnings that the move might constitute the euro area?s first sovereign default. Reserve Bank of Australia Governor Glenn Stevens reiterated policy makers will need to raise interest rates at some stage, while China lifted banks? reserve requirements yesterday to record levels.
?There are still worries over Greece, given uncertainty about how it can avoid a credit event such as a default,? said Tsutomu Soma, a bond and currency dealer at Okasan Securities Co. in Tokyo. ?Financial damage could be widespread. It?s a reason to sell the euro.?
The euro depreciated against 15 of its 16 most-active counterparts and slid 0.5 percent to 115.62 yen. EU finance ministers agreed to convene again on June 19, a day earlier than planned. Talks may drag on into July, Luxembourg?s Finance Minister Luc Frieden said.
Resolving Differences
German Chancellor Angela Merkel and French President Nicolas Sarkozy will meet on June 17 in Berlin, with pressure mounting on the leaders to resolve their differences on a rescue for Greece, which was downgraded this week to the world?s lowest credit rating by Standard & Poor?s.
The Dollar Index, which tracks the currency against those of six major trading partners, climbed 0.4 percent, halting a two-day retreat. Treasuries snapped a drop yesterday that sent yields on 10-year notes 11 basis points higher. The rate was at 3.07 percent today.
The cost of insuring corporate bonds in Japan against non- payment fell, with the Markit iTraxx Japan index falling 2.5 basis points to 127, according to Citigroup Inc. prices. The index fell 6.25 basis points, the most since March 21, to 129.75 yesterday, according to data from CMA, which is owned by CME Group Inc. and compiles prices quoted by dealers.
U.S. Economy
The S&P 500 jumped 1.3 percent yesterday, the biggest increase since April 20, after U.S. retail sales decreased at less than half the median forecast of economists. Separate reports today may show inflation is easing, while industrial production climbed 0.2 percent, according to economists surveyed by Bloomberg News.
MSCI?s Asia Pacific Index was little changed after a 1 percent rally yesterday, the steepest gain in two weeks. Japan?s Nikkei 225 Stock Average rose 0.3 percent. China Vanke Co. declined as Standard & Poor?s cut Chinese developers? outlook to ?negative? from ?stable? and after the increase in lenders? reserve requirements. Inflation may reach 6 percent this month, according to banks from Societe Generale SA to UBS AG.
?Monetary tightening remains the policy norm for now and expectations of easing have to be postponed,? said Venkatraman Anantha-Nageswaran, the Singapore-based global chief investment officer at Bank Julius Baer & Co., which has about $304 billion of client assets. ?That also makes it unlikely that a bottom for China stocks is in sight in the near future.?
HTC, QBE
HTC Corp. was the biggest drag on the regional benchmark index, dropping by the 7 percent daily limit in Taipei after Macquarie Group Ltd. cut its investment rating on the mobile- phone maker. QBE Insurance Group Ltd. slumped 3.7 percent after Australia?s largest insurer by market value forecast that its insurance margin in the first half will be lower than last year.
Oil for July delivery slid 0.8 percent to $98.62 a barrel on the New York Mercantile Exchange. Prices rallied 2.1 percent yesterday, the steepest gain in almost four weeks, after the industry-funded American Petroleum Institute said crude stockpiles fell 3.01 million barrels to 363 million, the lowest in seven weeks.
An Energy Department report today may say crude inventories slid 1.8 million barrels from 368.9 million, according to a Bloomberg News survey of 13 analysts.
Copper for three-month delivery declined 0.4 percent to $9,134 a metric ton on the London Stock Exchange, snapping yesterday?s 2.9 percent jump. Aluminum, lead and zinc also declined.
--With assistance Henry Sanderson in Beijing and Masaki Kondo, Kristine Aquino and Alex Kwiatkowski in Singapore. Editors: Shelley Smith, Nick Gentle
To contact the reporters on this story: Shiyin Chen in Singapore at schen37@bloomberg.net; Ron Harui in Singapore at rharui@bloomberg.net.
To contact the editor responsible for this story: Shelley Smith at ssmith118@bloomberg.net
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