Stocks and U.S. equity futures erased gains as Spain’s three-month borrowing costs more than doubled at an auction and concern that European leaders are running out of options to solve the debt crisis sent French and Italian yields higher.
The Stoxx Europe 600 Index slipped 0.1 percent at 8:17 a.m. in New York, after earlier climbing 1 percent. Standard & Poor’s 500 futures lost less than 0.1 percent. Spain’s two-year note yield rose 14 basis points to 5.73 percent, with France’s yield nine basis points higher. Copper snapped a three-day decline and gold rebounded from a one-month low.
Spain sold three-month bills at a yield of 5.11 percent, more than double the 2.292 percent yield the last time the debt was offered on Oct. 25. Michael Meister, finance spokesman for German Chancellor Angela Merkel’s Christian Democratic party, said “we haven’t any new bazooka to pull out of the bag.” Stocks (MXWD) gained earlier after Standard & Poor’s and Moody’s Investors Service kept the U.S.’s credit rating unchanged after Congress failed to reach an agreement, setting the stage for $1.2 trillion in automatic spending cuts.
“When you look at valuation measures for global equities, they’re all running well below historical averages,” Shane Oliver, the Sydney-based head of investment strategy at AMP Capital Investors Ltd., said in a Bloomberg Television interview. “Very tough economic conditions are already priced in, probably something approaching a global recession.”
About $3.3 trillion has been wiped off global equity values this month amid concern Europe’s credit crisis is worsening.
Three shares advanced for every two that declined in the Stoxx 600. Antofagasta Plc and Xstrata Plc led a rally in mining companies, both climbing more than 1 percent. Thomas Cook Group Plc tumbled 67 percent as Europe’s second-largest tour operator said it held talks with banks on financing.
The S&P 500 slid to its lowest level since Oct. 7 yesterday. Hewlett-Packard Co. fell 1.6 percent in pre-market trading after forecasting first-quarter profit and fiscal 2012 earnings that missed analysts’ estimates. (HPQ) Campbell Soup Co. publishes its earnings before U.S. equity markets open today. A Commerce Department report due at 8:30 a.m. in Washington will probably reaffirm that the world’s largest economy grew at a 2.5 percent pace in the third quarter.
The yield on Spain’s 10-year bond rose four basis points. The government also offered six-month bills at an average yield of 5.227 percent, compared with 3.302 percent last month.
The extra yield investors demand to hold Belgian 10-year bonds instead of benchmark German bunds increased 15 basis points after Belgium’s coalition talks were suspended as Elio Di Rupo offered to resign from leading the negotiations.
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