In the U.S.: Stocks Fall As Treasuries Rise After U.S. Jobs Report

6 July 2012

Underwhelming payroll figures symptomatic of “…weakness around the world.”

Stocks (SXXP) and U.S. equity futures fell after a report showed American employers hired fewer workers than forecast last month. Treasuries rose for a second day while Spain’s 10-year debt yields reached 7 percent.

The Stoxx Europe 600 Index lost 0.6 percent at 8:35 a.m. in New York. Standard & Poor’s 500 Index futures slipped 0.7 percent. Spain’s 10-year yields climbed as much as 26 basis points to 7.04 percent, while the yield on German two-year notes slid below zero. The rate European banks say they see each other lending in euros for three months fell to an all-time low. Treasury 10-year yields fell three basis point to 1.57 percent. Oil retreated 2.2 percent and corn declined 2.5 percent.

Payrolls rose 80,000 last month after a 77,000 increase in May, less than a 100,000 gain forecast in a Bloomberg survey, Labor Department data showed. The European Central Bank yesterday reduced its benchmark rate to a record low of 0.75 percent and the People’s Bank of China cut borrowing costs for a second time in a month.

“There is weakness around the world,” Stephen Roach, a professor at Yale University and former non-executive chairman for Morgan Stanley in Asia, said in an interview on Bloomberg Television. “When you are at extremely low levels of policy interest rates, you can’t expect that that’s going to jump-start the economy.”

Three shares fell for every one that advanced in the Stoxx 600. Spain’s largest banks, Santander SA and Banco Bilbao Vizcaya Argentaria SA (BBVA), contributed the most to the equity benchmark’s decline, falling more than 2 percent. Industrial production fell for the ninth month in May, the National Statistics Institute in Madrid said.

Peugeot Deliveries

A gauge of carmakers posted the biggest slide of the 19 industry groups on the Stoxx 600 after PSA Peugeot Citroen reported that first-half deliveries dropped 13 percent from a year earlier and its share of the European market declined. Theregion’s second-biggest carmaker tumbled 6.2 percent.

The decline in U.S. futures indicated the S&P 500 will pare its second week of gains. The unemployment rate held at 8.2 percent. Private employment, which excludes government agencies, increased 84,000 in June, the weakest in 10 months.

The euro slipped 0.2 percent to $1.2365, leaving it 2.3 percent lower this week, the sharpest decline since the five- days ended Dec. 16. The rate on German two-year notes was at minus 0.008 percent.

Euribor Drops

The euro interbank offered rate, or Euribor, for three- month loans was 0.549 percent, compared with 0.641 percent yesterday, European Banking Federation data showed.

The cost of insuring against default on European sovereign debt rose for a third day, with the Markit iTraxx SovX Western Europe Index of contracts on 15 governments climbing four basis points.

Oil in New York dropped to $85.28 a barrel, after falling 0.5 percent yesterday. Corn ended a 12 percent rally over three days that was due to dry weather crop damage in the U.S., the world’s biggest exporter of the grain. Wheat fell 2 percent.

The MSCI Emerging Markets Index (MXEF) lost 0.6 percent, trimming its weekly advance to 1.5 percent. The Micex Index fell 1.4 percent in Moscow. Samsung Electronics Co., the world’s largest maker of televisions and mobile phones, dragged South Korea’s Kospi Index down 0.9 percent after sales missed estimates. The Shanghai Composite Index gained 1 percent as shares of developers and industrial companies advanced.


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