Stocks fell around the world, driving the MSCI Emerging Markets Index down the most in three weeks, and metals declined after China moved to curb lending. The yen dropped after Japan’s new finance minister said he would welcome a weaker currency.
The MSCI emerging markets gauge slipped 0.7 per cent at 9:45 am in London, led by China as the Shanghai Composite Index plunged 1.9 per cent, the biggest decline among benchmark indexes tracked by Bloomberg. Futures on the Standard & Poor’s 500 Index lost 0.3 per cent. Copper retreated from a 16-month high and oil snapped an 11-day rally. The yen weakened against all 16 most- traded currencies.
Central bankers in China, the engine of the global economic recovery, sold three-month bills at a higher interest rate for the first time in 19 weeks after saying their 2010 focus is controlling record loan growth. The Federal Reserve said in the minutes of its latest meeting that the US economic recovery might require additional stimulus measures to be sustained.
“Growth will probably slow this year as tight credit will damp the demand side,” said Zhang Ling, who helps oversee $7.2 billion at ICBC Credit Suisse Asset Management Co in Beijing. “That will dash investors’ hope of another year of fast growth.”
The MSCI World Index of 23 developed nations’ stocks slipped 0.2 per cent. European and Asian stocks declined from the highest levels in more than 15 months.
All but one industry group on Europe’s Dow Jones Stoxx 600 Index retreated. Tate & Lyle Plc slid 5.7 per cent in London after Credit Suisse Group AG downgraded the maker of the low- calorie sweetener Splenda. Lagardere SCA slipped 2.4 per cent in Paris after Goldman Sachs Group Inc. recommended selling shares of France’s largest publisher.
The decline in US futures indicated the S&P 500 may also slip from a 15-month high. The biggest annual rally in six years in 2009 left the measure trading at more than 24 times its companies’ reported operating earnings, the highest level since 2002, according to Bloomberg data.
Economies are recovering from the first global recession since World War II. American job losses probably stopped in December for the first time since the slump began two years ago, according to the median of 74 economists surveyed by Bloomberg News before a Labor Department report tomorrow. The unemployment rate may have climbed to 10.1 per cent from 10 per cent.
More stimulus “might become desirable at some point,” some Fed officials said at the central bank’s December 15-16 meeting. The dollar rose against 15 of the 16 most-trade currencies.
The Australian dollar appreciated after the government said retail sales rose in November by the most in eight months, prompting speculation the nation’s central bank will raise interest rates for a fourth time. The Czech central bank may push up borrowing costs in the second half of this year, Vice- Governor Miroslav Singer told a newspaper.
Developing-nation stocks fell from their most expensive valuations since 2000, with the MSCI index trading at 24.4 times reported earnings yesterday, according to data compiled by Bloomberg. Poland’s WIG 20 Index dropped 1.2 per cent after the government said it’s seeking to sell shares of copper producer KGHM Polska Miedz SA.
In China, SAIC Motor Co, the country’s biggest carmaker, plunged 4.4 per cent on prospects auto sales will slow this year. Industrial & Commercial Bank of China Ltd, the nation’s largest publicly traded lender, and China Citic Bank Corp dropped more than 2 per cent.
Copper for delivery in three months fell 0.6 per cent to $7,615 a ton on the London Metal Exchange. Aluminum, nickel and zinc also dropped. Gold for immediate delivery retreated 0.4 per cent to $1,133.43 an ounce as the dollar strengthened. Corn declined 1.2 per cent to $4.1675 a bushel in Chicago, partly on expectations that Argentina, the world’s second-biggest exporter of the grain, may increase output.
Natural gas rose in the US and UK as freezing conditions gripped the northern hemisphere. Gas futures in New York gained for a second day, advancing as much 1.3 per cent to $6.085 per million British thermal units. U.K. gas for immediate delivery jumped as much as 20 per cent after Statoil ASA reported a production fault in the North Sea. Crude oil in New York dropped as much as 0.8 per cent to $82.51 a barrel.
In Japan, Finance Minister Naoto Kan said he would welcome a weaker yen as an 18 per cent climb against the dollar in two years threatens exports. The yen declined most against the South Korean won, losing 0.6 per cent, after Kan said in his first day in office that he would like to see the currency weaken “a bit more” as the country seeks to tackle deflation and the country’s deepest postwar recession.
