Dec. 20 (Bloomberg) -- The euro weakened to a record low against the Swiss franc and German bunds gained amid concern Europe’s debt crisis is deepening. European stocks rose, copper traded near an all-time high while gold and raw sugar advanced. The 16-nation European currency fell against 13 of its 16 biggest peers at 9:50 a.m. in London, losing as much as 0.6 percent against the franc and 0.2 percent versus the dollar. The bund yield dropped five basis points to 2.98 percent. The Stoxx Europe 600 Index climbed 0.4 percent, while futures on the Standard & Poor’s 500 Index were up 0.1 percent. South Korea’s Kospi Index lost 0.3 percent, paring an earlier drop of 1.5 percent. Copper added 0.8 percent, gold rallied 0.6 percent and raw sugar jumped to a 28-year high. Irish legislation to fix the nation’s financial system may hinder the European Central Bank’s liquidity operations, the ECB said in a Dec. 17 report. Investors became more skittish as South Korea commenced a live-firing drill that drew threats of retaliation from North Korea and the United Nations Security Council didn’t agree on steps to ease tension in the region. “A prolonged debt problem in Europe creates uncertainty and volatility in the financial system that could make investors risk averse,” said Steve Sevidal, who helps manage $1.24 billion as chief investment officer at United Coconut Planters Bank in Manila. “It’s in nobody’s interest for the conflict in the Korean peninsula to erupt into a full-blown war.” French Bond The euro slid 0.5 percent against the yen, weakening to the lowest level in almost two weeks. The New Zealand dollar strengthened against all 16 of its most-actively traded counterparts, advancing 0.5 percent versus the U.S. currency. The franc appreciated 0.3 percent compared with the dollar. The yield on the French 10-year bond declined three basis points to 3.36 percent. The similar-maturity U.S. Treasury yield fell two basis points to 3.31 percent before the Federal Reserve buys as much as $17 billion of securities maturing between 2014 and 2020 as part of its so-called quantitative-easing program. The Stoxx 600 advanced as Volkswagen AG, Europe’s biggest carmaker, rallied 2.3 percent after saying it expects sales in China to grow 10 to 15 percent next year. Abertis Infraestructuras SA gained 3.7 percent following a Sunday Times report that CVC Capital Partners Ltd. may bid for the Spanish highway operator. Banco Popolare SC climbed 6.4 percent, the first gain in eight days, after Goldman Sachs Group Inc. lifted its recommendation on the lender to “neutral” from “sell.” Lloyds Banking Group Plc, which last week said it will more than double its Irish bad-loan charge in the second half, slipped 1.4 percent, while Bank of Ireland tumbled 7.8 percent. Airline Disruption Airline stocks retreated as snow in Europe disrupted air travel for a third day. British Airways Plc sank 2.4 percent, while Deutsche Lufthansa AG lost 1.5 percent. U.K. natural gas for same-day delivery surged 14 percent, trading at 73.5 pence a therm, after National Grid Plc forecast record demand today. U.S. futures were little changed, indicating the S&P 500 may struggle to extend three weeks of gains. The benchmark gauge closed last week at its highest level since September 2008. Copper climbed $75 to $9,145 a metric ton, near the all- time high of $9,267.50 reached on Dec. 14. Raw sugar rose as much as 3.1 percent to 33.5 cents a pound, the highest price since January 1981. Gold rose $7.75 to $1,383.20 an ounce. The MSCI Emerging Markets Index retreated 0.4 percent. China’s Shanghai Composite Index sank 1.4 percent, the biggest decline in almost three weeks, on speculation the government will raise interest rates to curb inflation. Investors are too optimistic given the prospects for tighter monetary policy, Hao Hong, a Beijing-based equity strategist at China International Capital Corp., wrote in a report today. The forint weakened 0.2 percent against the euro before the Hungarian central bank’s interest-rate decision scheduled for 2 p.m. Budapest time. The cost of insuring South Korean debt jumped the most in almost three weeks, according to CMA prices for credit-default swaps. Contracts insuring $10 million of debt for five years rose $7,000 to $100,000 a year. --With assistance from David Merritt, Michael Patterson, Daniel Tilles, Claudia Carpenter, Michael Shanahan and Stephen Voss in London. Editors: Justin Carrigan, Mark Gilbert. To contact the reporter for this story: Justin Carrigan in London at jcarrigan@bloomberg.net To contact the editor responsible for this story: Justin Carrigan at jcarrigan@bloomberg.net

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