ECONOMY

European stocks decline before EU meeting

Stocks in Europe fell ahead of a European Union leaders meeting and testimony by Federal Reserve Chairman Ben S. Bernanke on the economy. Most Asian stocks rose after the Bank of Japan maintained its easing plan while oil declined.

The Stoxx Europe 600 Index fell 0.2 percent as of 8:34 a.m. in London, after reaching the highest since June 2008 yesterday. The MSCI Asia Pacific Index increased 0.1 percent as the Topix Index of Japanese stocks climbed 0.4 percent. Standard & Poor’s 500 Index futures were little changed. West Texas Intermediate fell 0.5 percent to $95.75 a barrel. Germany’s 10-year bond yields rose ahead of a debt auction.

European Unions leaders meet in Brussels today to discuss energy, tax and financing opportunities in the region while the Bank of England will release its May meeting minutes. Bernanke is due to deliver an economic outlook to Congress as economists forecast U.S. existing home sales climbed in April to the highest since November 2009. The Bank of Japan affirmed a plan to double the monetary base over two years as growth in the world’s third-largest economy accelerates.

“Stocks are retreating but it’s a small pullback in the context of recent euphoric rally,” said Alessandro Bee, an economist at Bank Sarasin & Cie AG in Zurich. “It’s a bit overdone and I’m concerned any disappointment isn’t priced in.”

Consumer Spending

U.K. retail sales including fuel probably increased 0.1 percent in April after a 0.7 percent drop in March, according to a Bloomberg survey ahead of a National Statistics Office report.

Germany’s 10-year bond yield rose four basis points, or 0.04 percentage point, to 1.43 percent. The government will today sell 5 billion euros ($6.5 billion) of notes due 2023.

GovernorHaruhiko Kuroda and his BOJ colleagues kept a pledge to expand the supply of money in the economy by 60 to 70 trillion yen ($682 billion) a year. The decision, first announced in April, was expected by 26 of 27 economists in a Bloomberg News survey.

Global shares extended a rally after Federal Reserve Bank of St. Louis President James Bullard said yesterday the Fed should continue its bond buying program to support growth. New York Fed President William C. Dudley said he hasn’t decided how the stimulus should be varied.

William Morrison

WM Morrison Supermarkets Plc (MRW) lost 2 percent after UBS AG placed shares on behalf of an international seller. Deutsche Bank AG rose 0.5 percent as it asks investors to replace three non-bankers supervising its executives with finance and legal experts.

One stock rose for each that fell on the MSCI Asia Pacific gauge as half of its 10 industry groups climbed. The Topix has rallied 48 percent this year to levels last seen in August 2008. South Korea’s Kospi index jumped 0.6 percent while Hong Kong’s Hang Seng Index lost 0.4 percent after the morning’s trading session was canceled because of a storm.

Trading house Sojitz Corp. (2768) jumped as much as 25 percent in Tokyo after the Nikkei newspaper said pretax profit for the year ending March 2015 may be 30 percent higher-than-expected. Sony Corp. (6758) rose 5.9 percent on a report it may spin off its entertainment unit.

Tokyo Electric Power Co. fell 9.6 percent. Stock in the utility at the center of the worst nuclear disaster since Chernobyl has surged 234 percent this year through yesterday, the most among the 2,428 securities in the MSCI World gauge, even as it said it plans to pay no dividend and may face $107 billion in cleanup costs stemming from the March 2011 earthquake and tsunami.

Yen, Crude

A gauge of utility shares in Japan’s benchmark Topix index has almost doubled in yen terms since mid-November when it became clear the Liberal Democratic Party, a longtime supporter of nuclear power, would win elections last December.

The yen traded near a four-year low of 102.49 per dollar. The nation’s trade deficit swelled in April as overseas shipments rose 3.8 percent from a year earlier, trailing the median 5.4 percent estimate in a Bloomberg survey. The currency has weakened 13 percent this year, the worst performer among developed-nation peers tracked by Bloomberg Correlation-Weighted Currency indexes.

“The yen’s depreciation won’t be enough to end the deficit,” Kiichi Murashima, Citigroup Inc.’s chief economist in Tokyo. “The trade deficit will continue through 2014.”

The won snapped a two-day advance, falling 0.1 percent to 1,112.07 per dollar, after Bank of Korea Governor Kim Choong Soo flagged the possibility of the U.S. ending its monetary stimulus.

WTI crude fell for a second day from near a seven-week high, while Brent futures lost 0.6 percent on speculation supplies will remain sufficient in the U.S. even if stockpiles decrease, as is the forecast.

U.S. crude supplies fell by 800,000 barrels last week, according to a Bloomberg News survey before a report today from the Energy Information Administration. That would still leave inventories 3 percent higher than a year ago.

[Bloomberg]