Europe Index Futures Drop With Asia Stocks; Copper Gains

Europe’s benchmark stock index fell

for a second day, extending its retreat from a five-year high,

while Australia’s dollar and emerging-market currencies

weakened. Industrial metals paced gains in commodities.

The Stoxx Europe 600 Index lost 0.2 percent at 8:14 a.m. in

London, while Standard Poor’s 500 Index futures were little

changed. The MSCI Asia Pacific Index fell 0.5 percent, led by
WorleyParsons Ltd. (WOR)’s 26 percent tumble in Sydney. The Aussie

weakened 0.5 percent versus the dollar and Thailand’s baht

reached a two-month low. Volatility in the yuan touched a five-month high as the People’s Bank of China elaborated on plans to

ease state control of markets. Copper rose 0.4 percent.

The Federal Reserve and the Bank of England will release

minutes of their latest policy meetings today. Fed Chairman Ben

S. Bernanke said yesterday the benchmark interest rate will

remain near zero for a “considerable time” after the central

bank’s debt purchases end. The Organization for Economic

Cooperation and Development cut its global growth forecasts

yesterday, citing a slowdown in developing nations.

“While the U.S. continuing with quantitative easing is

positive, a lot of the expectations have already been priced

into stocks, so investors feel cautious when shares rise too

high,” said Naoki Fujiwara, the Tokyo-based chief fund manager

at Shinkin Asset Management Co.

Valuations Rise

The Stoxx Europe 600 index has gained 15 percent this year,

while the MSCI Asia Pacific index climbed 10 percent and the SP

500 advanced 25 percent. The U.S. equity benchmark gauge is

valued at about 15 times projected earnings for the next 12

months, near the highest level in four years, according to data

compiled by Bloomberg.

The European gauge fell 0.7 percent yesterday after

reaching the highest since May 2008 on Nov. 18. Almost two

stocks fell for each that rose on the MSCI Inc.’s Asian measure,

which closed at a three-week high on Nov. 18 after China

detailed its biggest package of reforms since the 1990s.

Australia’s SP/ASX 200 Index sank 0.8 percent to the

lowest level since Oct. 17. WorleyParsons, the nation’s biggest

oil and gas engineer, posted a record tumble after reducing its

profit forecast. Japan’s Topix index fell 0.3 percent and South

Korea’s Kospi index slid 0.7 percent. Equity indexes in the
Philippines, Indonesia and Russia also decreased.

The SP 500 dropped for a second day yesterday as investors

weighed rising valuations and disappointing earnings forecasts.

Retail sales in the U.S. probably returned to growth last month,

according to a Bloomberg survey of economists before data today.

Aussie Weakens

The world economy will probably expand 2.7 percent this

year and 3.6 percent next year, instead of the 3.1 percent and

and 4 percent predicted in May, the Paris-based OECD said in a

semi-annual report yesterday.

The Aussie snapped a three-day advance against the

greenback, while yields on the nation’s 10-year notes increased

5 basis points to 4.27 percent. New Zealand’s dollar depreciated

0.4 percent and India’s rupee slipped 0.3 percent. The baht

touched 31.74 per dollar, the weakest since Sept. 18.

The onshore yuan’s one-month implied volatility, a measure

of expected moves in the exchange rate used to price options,

climbed three basis points to 1.72 percent, after jumping 15

basis points yesterday, according to data compiled by Bloomberg.

It earlier rose to 1.79 percent, the highest since the beginning

of July.

Yuan Band

The central bank will widen the currency’s daily range in

an “orderly way” and “basically” end normal intervention in

the market to bolster the yuan’s two-way flexibility, PBOC

Governor Zhou Xiaochuan wrote in a guidebook explaining reforms

following a Communist Party meeting. He didn’t give a time

frame.

The Hang Seng China Enterprises Index of mainland shares

traded in Hong Kong rose 0.6 percent, erasing its loss for the

year. The city’s Hang Seng Index gained 0.2 percent, while the

Shanghai Composite Index increased 0.6 percent. Zhou also wrote

that China will phase out investment caps for both domestic and

foreign investors.

BlackRock Inc. Chief Executive Officer Laurence D. Fink,

who last week predicted a chance of a 15 percent correction in

stock markets, said he’s “less worried” now after China

announced economic reforms and amid signs U.S. policy makers

will pass a budget deal.

The SP GSCI Index of 24 raw materials added 0.1 percent,

rallying from a one-week low. Copper advanced for the first time

in three days, with the contract for delivery in three months

gaining as much as 0.7 percent. Lead, nickel, aluminum, zinc and

tin also increased. Natural gas rose 0.3 percent, while soybeans

climbed 0.2 percent.

To contact the reporters on this story:

Glenys Sim in Singapore at

gsim4@bloomberg.net;

Anna Kitanaka in Tokyo at

akitanaka@bloomberg.net

To contact the editor responsible for this story:
Michael Patterson at

mpatterson10@bloomberg.net

Enlarge image

Fed Chairman Ben S. Bernanke

Andrew Harrer/Bloomberg

Ben S. Bernanke, chairman of the U.S. Federal Reserve, listens to a question during a discussion at the National Economists Club annual dinner in Washington, D.C. on Nov. 19, 2013.

Ben S. Bernanke, chairman of the U.S. Federal Reserve, listens to a question during a discussion at the National Economists Club annual dinner in Washington, D.C. on Nov. 19, 2013. Photographer: Andrew Harrer/Bloomberg

Nov. 20 (Bloomberg) — Kit Juckes, global strategist at Societe Generale SA, talks about the outlook for volatility in currency markets and trading strategies.

He spoke Nov. 15 in London with Bloomberg’s Baden Campbell. (Source: Bloomberg)

Nov. 20 (Bloomberg) — Melissa Chau, a research manager at IDC Asia Pacific, talks about the outlook for the smartphone market in the so-called BRIC countries.

She speaks with Rishaad Salamat on Bloomberg Television’s “On the Move.” (Source: Bloomberg)

Nov. 19 (Bloomberg) — Dariusz Kowalczyk, senior economist and strategist at Credit Agricole CIB in Hong Kong, talks about China’s economy.

He speaks with Rishaad Salamat on Bloomberg Television’s “On the Move.” (Source: Bloomberg)

Nov. 18 (Bloomberg) — Adrian Mowat, the Hong Kong-based chief Asia and emerging-market strategist at JPMorgan Chase Co., talks about the region’s markets and his investment strategy.

He speaks with Angie Lau and Rishaad Salamat on Bloomberg Television’s “Asia Edge.” (Source: Bloomberg)

Nov. 18 (Bloomberg) — Nader Naeimi, Sydney-based head of dynamic asset allocation at AMP Capital Investors Ltd., talks about global stock markets.

He speaks with Rishaad Salamat on Bloomberg Television’s “On the Move.” (Source: Bloomberg)

Europe Index Futures Drop With Asia Stocks; Copper Gains