Europe Stocks Climb on Ukraine as Treasuries, Dollar Fall
Frankfurt (Sept 3) European stocks rose and the ruble rebounded, while U.S. Treasuries and the dollar declined as Russia and Ukraine discussed steps toward a cease-fire.
The Stoxx Europe 600 Index rose 0.8 percent at 7:35 a.m. in New York, while Russia’s ruble strengthened 1.5 percent after finishing yesterday at its lowest level since at least 2003. The yield on 10-year Treasury notes climbed to a three-week high and the Bloomberg Dollar Spot Index slipped, ending a three-day run of gains. Standard & Poor’s 500 Index futures added 0.3 percent and the MSCI Emerging Market Index advanced 1.1 percent to its highest level in three years. Oil in London rose 1.1 percent.
Ukraine’s President Petro Poroshenko and his Russian counterpart Vladimir Putin discussed how to move toward a cease-fire in the contested eastern region of Donbass. Markit Economics’ measure of services activity in the euro zone dropped more than analysts expected, rekindling speculation that European Central Bank President Mario Draghi will use tomorrow’s meeting to announce additional stimulus. Asian equities rallied earlier as a private gauge showed non-manufacturing activity in China jumped in August from its lowest-ever reading in July.
“The cease-fire in Ukraine is very important,” said Heinz-Gerd Sonnenschein, a strategist at Deutsche Postbank AG in Bonn. “People are beginning to wonder whether there will finally be a conclusion to the crisis, and if investors can focus on other factors, like economic indicators and central-bank policy. We have to see what the parties will choose to do, but right now, this is a positive driver.”
European Equities
Carmakers led gains in European equities as French automobile manufacturers Renault SA and Peugeot SA rose more than 3 percent. Banks advanced as Italian lenders UniCredit SpA and Intesa Sanpaolo SpA added more than 2 percent.
LVMH Moet Hennessy Louis Vuitton SA increased 2.6 percent after the luxury-goods maker said it will relinquish a $7.5 billion stake in Hermes International SCA. (RMS) LVMH will distribute the shares to its investors, the company said in a statement.
Hermes International SCA slid 5.1 percent as LVMH, Christian Dior SA and Groupe Arnault -- the holding company for French billionaire Bernard Arnault -- agreed not to buy any more shares in the Hermes for the next five years.
Danone added 1.9 percent after the French yogurt maker named Emmanuel Faber as its new chief executive officer.
Strengthening Ruble
The ruble strengthened the most since April against the dollar, while the Micex Index jumped 2.9 percent, its biggest gain in three months. The Ukrainian Equities Index climbed 3.3 percent and the 2017 Eurobond rose for the first time in 11 days, pushing the yield 91 basis points lower to 12.637 percent.
Poroshenko and Putin discussed the steps needed for an immediate cease-fire during a phone call, a Kremlin spokesman said. The two men agreed on what to do for a truce between Ukraine’s army and pro-Russian separatists to come into effect. The conflict in eastern Ukraine has claimed at least 2,600 lives, according to estimates from the United Nations.
Poland’s zloty strengthened 0.4 percent against the euro and Hungary’s forint appreciated 0.5 percent. The Czech Republic’s koruna climbed 0.3 percent.
U.K. gas for next-month delivery slid as much as 4.4 percent, its biggest decline in more than two weeks. About half of Russia’s exports of gas to Europe pass through Ukraine.
Chinese Services
The Hang Seng China Enterprises Index of mainland companies listed in Hong Kong jumped 3.2 percent to its highest level this year after a report showed services activity accelerated in the world’s second-largest economy. The Shanghai Composite Index (SHCOMP) rose 1 percent.
The non-manufacturing purchasing managers’ index advanced to 54.4 in August from 54.2 in July, the National Bureau of Statistics and China Federation of Logistics and Purchasing said today. A separate services gauge from HSBC Holdings Plc and Markit Economics surged to a 17-month high of 54.1, from 50 in July. Readings above 50 for both gauges mean that activity expanded.
Bonds fell as demand for haven assets declined. The rate on 10-year Treasuries jumped three basis points, or 0.03 percentage points, to 2.45 percent, briefly touching 2.47 percent, its highest level since Aug. 13. Germany’s 10-year yield increased three basis points to 0.96 percent and Britain’s increased four basis points to 2.48 percent.
The Bloomberg Dollar Spot Index slipped 0.2 percent as the U.S. currency weakened against most of its major counterparts. It fell the most versus Australia’s dollar and South Africa’s rand.
Brent oil rose 1.1 percent to $101.43 a barrel, rebounding from its lowest closing price since May 2013, as traders speculated that the agreement on steps toward a cease-fire may lead to a revival of trade with Russia. Gold climbed 0.2 percent to $1,267.49 an ounce, increasing for the first time in four days.
Bank of America Corp. and Citigroup Inc. are selling bonds in euros as the cost of borrowing in the common currency relative to the U.S. dollar fell to the lowest since August 2009.
Source: Bloombverg
