Stocks Advance With Portuguese Bonds as Yen, Gold Decline

London (July 14) Stocks rose around the world after a gauge of global shares had its biggest weekly loss in three months. Portuguese bonds advanced, while gold declined and the yen weakened.

The MSCI All-Country World Index added 0.3 percent at 6:48 a.m. in New York. Standard & Poor’s 500 Index futures also rose 0.3 percent, after the U.S. gauge’s biggest weekly decline since April. Portugal’s 10-year securities headed for the biggest two-day gain in a month. The cost of insuring against losses on financial debt decreased for a second day. Japan’s currency retreated against its 16 major peers. Gold fell 1.3 percent and silver lost 1.4 percent.

European Central Bank President Mario Draghi will speak to lawmakers in Strasbourg after announcing a package of measures last month to shore up the economy. Banco Espirito Santo SA’s parent sold a 4.99 percent stake to meet loan repayments and the bank named Vitor Bento chief executive officer. Financial troubles at the group sparked concern last week that the region was vulnerable to financial shocks, triggering a selloff that helped erase $1 trillion from the value of global equities.

“Last week was a reminder that the European financial crisis is far from over,” said Christian Zogg, who manages the equivalent of about $11 billion as head of equity and fixed income at LLB Asset Management AG in Vaduz, Liechtenstein. “The Portuguese bank Espirito Santo was doing some harm to sentiment. The situation seems to be under control so far.”

Citigroup Earnings

Citigroup Inc. (C) is scheduled to report earnings today followed by companies from Goldman Sachs Group Inc. to Intel Corp. and Johnson & Johnson later this week. Federal Reserve Chair Janet Yellen is set to begin giving testimony to Congress tomorrow.

The Stoxx Europe 600 Index climbed 0.7 percent as all 19 industry groups rose, with trading volumes 12 percent lower than the 30-day average, data compiled by Bloomberg show. The gauge slid 3.2 percent last week, its biggest weekly drop since March.

Shire Plc advanced 2.3 percent after the U.K. drugmaker said it’s willing to back a 31.4 billion-pound ($53.7 billion) takeover by AbbVie Inc. Rolls-Royce Holdings Plc rose 1.6 percent after Airbus Group NV said it will use the U.K. company’s engines to upgrade its A330 plane. Airbus gained 1.4 percent.

Banco Espirito Santo tumbled 7.5 percent and its subordinated bonds fell to a record. The hiring of Bento, along with Jose Honorio as deputy CEO and Joao Moreira Rato as chief financial officer, was announced by the bank today after the Portuguese central bank ordered an extraordinary meeting of the board to bring forward the proposed changes.

Meda Falls

Meda AB, the Swedish producer of allergy medicine, fell 5.5 percent after a person familiar with the matter said Mylan Inc. is in late-stage talks to buy some of Abbott Laboratories’ portfolio of drugs in Europe.

Futures (SPX) on the S&P 500 expiring in September rose today. The index dropped 0.9 percent last week. Investors are betting on increased volatility after the Chicago Board Options Exchange Volatility Index jumped 17 percent last week.

Profit at S&P 500 companies probably rose 4.5 percent in the three months through June, while sales gained 3.1 percent, analyst estimates compiled by Bloomberg show.

“The second-quarter earnings season in the U.S. is likely to be the next major driver of global markets,” Evan Lucas, a markets strategist in Melbourne at IG Ltd., wrote in an e-mail to clients today. “With all the major U.S. banks reporting this week, the market will get the best view of the ‘self-sustaining’ U.S. economy that the Fed now sees.”

Emerging Markets

The MSCI Emerging Markets Index added 0.2 percent, advancing after the first weekly decline in three weeks. The Shanghai Composite Index added 1 percent, the most in a month, and the Hang Seng China Enterprises Index of mainland shares traded in Hong Kong added 0.8 percent.

China’s economy, the world’s second-largest, probably expanded 7.4 percent in the three months to June 30 from a year earlier, according to the median of 44 economists’ estimates compiled by Bloomberg before data scheduled for July 16.

Indonesia’s rupiah dropped the most in more than a week after Bank Indonesia said the current-account deficit probably widened to near a record last quarter. The currency fell 0.6 percent to 11,658 per dollar, the biggest drop since July 2, prices from local banks show.

The ruble retreated 0.3 percent per dollar and the Micex Index slipped 0.8 percent. Russia and Germany called for a resumption of Ukraine crisis talks after an artillery shell landed in Russian territory, killing one person.

Portugal Bonds

Portugal’s 10-year yield fell eight basis points to 3.79 percent. The rate is down 19 basis points in the past two trading days, the biggest drop since the period through June 9.

German 10-year rates was little changed at 1.21 percent and the yield on similar-maturity Treasury notes rose less than one basis point to 2.52 percent.

The Markit iTraxx Senior Financial index of credit-default swaps on 25 banks and insurers dropping two basis points to 70 basis points, the lowest since July 9. The gauge jumped 19 percent last week.

The yen declined 0.2 percent to 101.48 per dollar, the biggest drop since July 3. It fell 0.4 percent to 138.39 per euro. The 18-nation shared currency rose 0.2 percent to $1.3635.

Gold dropped for the first time in four days to $1,321.47 an ounce. The metal will be lower by the end of December as the economy improves, Jeffrey Currie, head of commodities research at Goldman Sachs, said in a July 11 interview. Currie expects prices will be $1,050 by the end of 2014, maintaining a forecast from the start of the year.

The Bloomberg Commodity Index (BCOM) fell as much as 0.4 percent to the lowest since Feb. 13, dropping for a seventh consecutive day in the longest streak since June 28.

Source: Bloomberg