Stocks rebounded in Japan on Wednesday even as European shares and US index futures fluctuated and the euro weakened.
The MSCI World Index of stocks climbed 0.5 per cent at 11:46 am in London. The Nikkei 225 surged 5.7 per cent, recovering from its biggest two-day drop since 1987, and futures on the Standard & Poor’s 500 Index reversed earlier gains. The euro weakened 0.4 per cent to $1.4. The yield on the 10-year Portuguese bond increased three basis points to 7.44 per cent.
Bahrain suspended stock trading because of a state of emergency as Saudi Arabia, holder of the world’s biggest oil reserves, sent troops into the neighboring kingdom to help quell protests. Libyan government troops moved against rebels in the east. The advance in the Japan’s Nikkei 225 came as fires at a nuclear plant hampered efforts to avert a meltdown, following damage from a March 11 earthquake, the country’s worst.
“As long as there is no real calming of the unrest in West Asia I don’t see the risk premium disappearing” in oil prices, said Andy Sommer, a senior analyst at EGL AG in Dietikon, Switzerland. “Spill-over into Saudi Arabia that impacts exports would be the extreme scenario.”
Oil, natural gas
Brent oil for April settlement rose as much as $2.5, or 2.4 per cent, to $111.09 a barrel on the ICE Futures Europe exchange in London. US natural gas futures also gained and German electricity for delivery next year rose to the highest price since August 2009 after German yesterday said it would keep its oldest atomic plants shut while safety reviews are conducted. Carbon permits also rallied to a two-year high as nuclear shutdowns boost European reliance on fossil fuels.
Copper for delivery in three months rose 2.4 per cent to $9,340 a metric tonne on the London Metal Exchange, leading gains in industrial metals. Wheat for May delivery advanced 3.6 per cent to $6.92 a bushel in Chicago trading, rebounding from yesterday’s 7.4 per cent slump.
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The Nikkei 225’s jump was the biggest since November 2008. Benchmark equity indexes in South Korea, Taiwan and India rallied at least 1 per cent. The cost of protecting Tokyo Electric Power Co. bonds from default fell 22 per cent from a record, while the price to insure Japanese government debt also tumbled from an all-time high.
The Bloomberg GCC 200 Index of Persian Gulf shares gained 0.3 per cent after falling 2.5 per cent yesterday. Security forces in Bahrain used tear gas to drive protesters from their rallying point in Manama.
European stocks fall
The Stoxx Europe 600 Index slid 0.3 per cent, erasing an earlier gain as banks and health-care companies declined. Sonova Holding AG tumbled 21 per cent, the most in eight years, after the Swiss hearing-aid maker cut its forecasts.
S&P 500 futures slipped 0.3 per cent, indicating the benchmark gauge for US stocks will fall for a third day. Reports today may show builders began work on fewer houses in February, while prices paid to producers increased on higher energy costs, according to Bloomberg surveys of economists. Federal Reserve officials yesterday signaled they’re unlikely to expand a $600 billion bond-purchase plan as the recovery picks up steam.
The euro fell against 13 of its 16 most-traded peers, weakening 0.5 per cent versus the yen to 112.47. The 17-nation currency depreciated 0.4 per cent against the pound to 86.84 pence after a report showed U.K. jobless claims unexpectedly fell in February by the most in eight months. Norway’s krone rose 0.3 per cent against the euro before Norges Bank decides on interest rates. The central bank will keep its key rate at 2 per cent, according to 17 of 18 economists surveyed by Bloomberg.
Portugal bonds, ratings
The extra yield investors demand to hold Portugal’s 10-year bonds instead of benchmark German bunds rose four basis points to 431 basis points.
The Iberian nation’s credit rating was cut two steps by Moody’s Investors Service yesterday to A3, four steps from so- called junk status. Moody’s cited Portugal’s “subdued growth prospects” and “implementation risks for the government’s ambitious fiscal consolidation targets.” The change brings the rating company’s ranking for Portugal to the same level as Standard & Poor’s, with Fitch Ratings two steps higher.
The yield on the Irish 10-year bond advanced two basis points to 9.51 per cent, while Greek securities rose. The yield on the 10-year U.S. Treasury note slipped one basis point to 3.29 per cent.