BLBG: Dollar Drops, Commodities Gain as German Recovery Accelerates
By Stuart Wallace
Nov. 13 (Bloomberg) -- The dollar fell and commodities rose as Germany’s economic growth accelerated, reassuring investors that the global recovery from the first recession since World War II is gaining momentum.
The Dollar Index, a six-currency gauge, dropped for the first time in three days. Crude oil and copper gained 0.6 percent at 10 a.m. in London while gold climbed 0.2 percent. Futures on the Standard & Poor’s 500 index rose 0.3 percent.
Germany’s gross domestic product expanded 0.7 percent in the third quarter from the second, the government reported, while International Monetary Fund Managing Director Dominique Strauss-Kahn said the world economy is at a turning point and the recovery has started. The Reuters/University of Michigan index may show today that U.S. consumer sentiment improved.
“Overall risk sentiment is strong, holding up demand for the euro and commodity currencies,” said Yoh Nihei, trading group manager at Tokai Tokyo Securities Co. in Tokyo.
The Dollar Index, which tracks the U.S. currency against the yen, euro, pound, Canadian dollar, Swiss franc and Swedish krona, declined 0.3 percent, snapping a two-day advance. The index dropped two days ago to 74.774, the lowest level since August 2008. The Australian dollar climbed 0.6 percent to 92.92 U.S. cents as Strauss-Kahn said Asia will lead the global economic recovery, followed by the U.S. and then Europe.
European Rebound
The economy of the 16 euro nations emerged from the recession in the third quarter, expanding 0.4 percent from the second, a European Union report showed today.
Crude oil for December delivery rose 53 cents to $77.47 a barrel in New York trading. Copper for delivery in three months advanced $48.50 to $6,550 a metric ton on the London Metal Exchange. Nickel, zinc and tin also gained. Bank of America Merrill Lynch raised its 2010 forecasts for copper, nickel, aluminum and zinc. Gold for immediate delivery added $5.58 to $1,109.39 an ounce.
European stocks rose for a third day as Compagnie Financiere Richemont SA, the world’s largest jewelry maker, reported better-than-estimated profit and British Airways Plc sealed a merger accord with Iberia Lineas Aereas de Espana SA.
The Dow Jones Stoxx 600 Index of European shares gained 0.2 percent, extending a three-week high. Richemont surged 4.6 percent in Zurich. BA climbed 2.8 percent in London and Iberia added 2.4 percent in Madrid.
Asian Stocks Fall
Most Asian stocks dropped, trimming the MSCI Asia Pacific Index’s first weekly advance since Oct. 16. Central Glass Co. and Nippon Sheet Glass Co. declined more than 6 percent in Tokyo after reporting losses. Industrial & Commercial Bank of China Ltd. climbed 2 percent after its chairman predicted loan profitability among Chinese lenders will improve.
Futures indicated the S&P 500 may rise after falling yesterday from a 13-month high. Walt Disney Co., the world’s largest media company, reported profit that beat analysts’ estimates. Abercrombie & Fitch Co. and J.C. Penney Co. are among companies due to report earnings before the opening of U.S. equity markets today.
The Reuters/University of Michigan index will probably show that sentiment among U.S. consumers improved this month. The gauge may have risen to 71 from 70.6 in October, according to the median estimate of 69 economists in a Bloomberg survey. The measure is scheduled to be released at 10 a.m. New York time.
Emerging Markets
The MSCI Emerging Markets Index posted its seventh gain in eight days, rising 0.1 percent. India’s Bombay Stock Exchange Sensitive Index added 0.9 percent, the steepest increase among benchmark indexes in major developing-nations, as Tata Consultancy Services Ltd. jumped to a record on its deal to build a services center in Michigan for Dow Chemical Co.
Emerging-market currencies strengthened, with India’s rupee gaining 0.6 percent against the dollar and Hungary’s forint rising 0.7 percent versus the euro.
The U.S. economy will improve more quickly than most people currently forecast, said Johann Rupert, chairman of Richemont. Rupert said he cautious about the “sustainability of the improving economic outlook.”
Treasury 10-year notes slipped 1 basis point to 3.44 percent, according to BGCantor Market Data. The U.S. auctioned a record $16 billion of 30-year bonds yesterday, with the debt drawing the weakest demand since May. Sales of coupon-bearing Treasuries will increase to $2.38 trillion in the fiscal year that began Oct. 1, from $1.81 trillion in the prior 12 months, Goldman Sachs Group Inc. said in a report on Oct. 20.
The 10-year German bund yield fell 1 basis point to 3.35 percent, and similar-maturity gilt yields declined 2 basis points to 3.76 percent.
To contact the reporter on this story: Stuart Wallace in London at swallace6@bloomberg.net
