By Stuart Wallace Nov. 19 (Bloomberg) -- The yen and the dollar rose as investors sold high-yielding currencies on concern the rally has outpaced the prospects for economic growth. Stocks fell from Tokyo to London and commodities declined. The yen climbed against all 16 of its most-traded counterparts and the Dollar Index advanced as much as 0.5 percent at 10:00 a.m. in London. The MSCI World Index of equities in 23 developed countries fell 0.6 percent. Copper led a retreat in industrial metals and precious metals fell. Stocks declined amid speculation the eight-month, 69 percent rally that drove valuations on the MSCI World Index to the most expensive level in seven years already reflects forecasts for a 25 percent rebound in corporate earnings next year. The Organization for Economic Cooperation and Development doubled its growth forecast for the leading developed economies next year to 1.9 percent in a report today and said expansion in China and emerging markets will spur improvements in 2011. “The yen and U.S. dollar have been supported by the continued upturn in risk-averse conditions,” Lee Hardman, a currency strategist at Bank of Tokyo-Mitsubishi UFJ Ltd. in London, wrote in a report. “Current conditions remain unfavorable for risk assets, leaving them vulnerable to a correction lower.” Zloty Drops The yen appreciated 1 percent to 132.34 per euro and rose 0.3 percent to 89.06 against the dollar. The dollar advanced 0.7 percent to $1.4863 compared with the euro. New Zealand’s dollar tumbled 1.9 percent to 73.18 U.S. cents, the steepest decline this month based on closing prices. The Polish zloty fell 1.3 percent to 2.7770 per dollar. The MSCI Emerging Markets Index dropped the most in a week, retreating 1 percent. Hungary’s Budapest Stock Exchange Index fell 1.8 percent and Russia’s Micex Index slumped 1.3 percent while the ruble weakened 0.65 percent against the dollar. Emerging markets analysts cut “buy” ratings on Brazil to 44.6 percent this month, the lowest since Bloomberg began tracking them in 1997, after a 139 percent surge in the benchmark Bovespa Index pushed equities to their priciest levels in six years. Sixty-five percent of companies in the MSCI World Index that reported earnings this quarter have beaten analysts’ estimates, Bloomberg data show. The measure has risen 69 percent since March 9 on signs government stimulus policies and record- low interest rates are helping to pull the global economy out of the recession. Danone Declines Europe’s Dow Jones Stoxx 600 Index fell 0.5 percent, the third day of declines, after Groupe Danone SA, the world’s largest yoghurt maker, cut its forecast for annual sales growth, citing “profound” changes in consumer spending. Danone fell 3.9 percent in Paris. Asian stocks fell, dragging the MSCI Asia Pacific Index down for a third day, as share-sale plans at Japanese companies raised concern the value of existing holdings will be reduced. Mitsubishi UFJ Financial Group Inc. sank 3.7 percent and Nomura Real Estate Residential Fund Inc. slumped 8.6 percent after filing to sell stock. U.S. stock-index futures dropped, indicating the Standard & Poor’s 500 Index may decline for a second day. The contract on the S&P 500 expiring next month slipped 0.6 percent. The combined economy of the OECD’s 30 member countries will expand 1.9 percent next year and 2.5 percent in 2011, the Paris- based organization said today in a report. Output will contract 3.5 percent this year. The 2010 forecast compares with the 0.7 percent growth predicted by the OECD in June, when the major economies were just beginning to emerge from their worst recession in more than half a century. U.S. Indicators The index of U.S. leading indicators probably rose for a seventh consecutive month in October, signaling the economy will keep growing into next year, economists said before a report today. Another report may show manufacturing accelerated in the Philadelphia region this month. Copper for delivery in three months dropped $66.25 to $6,813.75 a metric ton on the London Metal Exchange, falling from a 14-month high. Aluminum, nickel and zinc also fell. Gold for immediate delivery retreated 0.9 percent to $1,135.66 an ounce, declining from a record $1,152.85 yesterday. Crude oil fell 0.7 percent to $79.05 a barrel in New York. Treasuries were little changed, with the yield on the 10- year note at 3.37 percent, before the U.S. government announces sales of two-, five- and seven-year notes today. The Treasury will sell $44 billion of two-year securities on Nov. 23, $42 billion of five-year debt on Nov. 24 and $32 billion of seven- year securities on Nov. 25, according to Wrightson ICAP LLC, a Jersey City, New Jersey-based research firm that specializes in government finance. President Barack Obama said in an interview with Fox News Recorded in Beijing that the U.S. must get the federal deficit under control. If the government continues to pile up debt, “people could lose confidence in the U.S. economy in a way that could actually lead to a double-dip recession,” he said. 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, primary dealer Goldman Sachs Group Inc. said in a report on Oct. 20. To contact the reporter on this story: Stuart Wallace in London at swallace6@bloomberg.net

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