European Stocks Rise With Bonds Before U.S. Data; Oil Declines

Emma O’Brien and Stephen Kirkland

European shares rose from a one-week low as geopolitical tension faded into the background and investors turned to focus on U.S. data from durable goods to oil inventories as well as next week’s European Central Bank policy meeting.

Travel and leisure stocks led the rebound after falling the most in two months on Tuesday when Turkey’s downing of a Russian jet near the border with Syria roiled global markets. Oil fell before a report forecast to show U.S. stockpiles increased. Turkey’s lira declined for a third day, while Russia’s ruble was little changed. Bonds gained from Ireland to Italy on speculation the ECB will step up stimulus.

“The focus is turning once again to evidence that the U.S. economy is doing well, which takes the edge off any market jitters,” said Rosamunde Price, who helps oversee about $14 billion as chief investment strategist at Seven Investment Management in London. “Until tensions really blow up, then markets can cope with geopolitics. The assumption is that the big players won’t go to war over this, so they’ll have to sort it out.”

U.S. economic reports including consumer spending, inflation and durable-goods orders will provide investors with clues to assess the pace of interest-rate increases on the last day of trading before the Thanksgiving break. U.S. President Barack Obama and the NATO military alliance called on Russia and Turkey to deescalate tensions, saying the two countries’ tussle risked undermining efforts to form a united front in the war against Islamic State.

Stocks

The Stoxx Europe 600 Index rose 1.1 percent at 9:54 a.m. in London. Standard & Poor’s 500 Index E-mini futures climbed 0.3 percent after the gauge erased losses to close little changed on Tuesday.

Tour operator Thomas Cook Group Plc rallied 9.8 percent after swinging to profit for the first time in five years. K+S AG jumped 7 percent on a report that Potash Corp. of Saskatchewan Inc. is working on a new takeover offer for the fertilizer maker. Prospects for dividend payouts boosted retailer Metro AG, Swiss Life Holding AG and LafargeHolcim Ltd.

U.K. homebuilders Persimmon Plc and Taylor Wimpey Plc rose more than 3.8 percent, leading gains on the FTSE 100 Index, before Chancellor of the Exchequer George Osborne’s Spending Review presentation to Parliament, in which he is expected to offer incentives for private developers to build affordable homes.

Emerging Markets

Russian stocks recovered some losses posted on Tuesday while Turkish equities were little changed after the two had the worst performances worldwide following the downing of the Russian fighter plane. The Micex Index climbed 0.2 percent in Moscow, after tumbling 3.1 percent the day before, and the Borsa Istanbul 100 Index fell less than 0.1 percent, following a 4.4 percent slump.

Gazprom PJSC dropped 2 percent in Moscow, extending a 4.2 percent slide on Tuesday, the most since May. Turkey is Russia’s second-biggest market for gas exports, and relies on Gazprom to meet half of its gas needs.

The lira weakened 0.4 percent, falling for a third day, and the ruble slipped 0.1 percent.

The Hang Seng China Enterprises Index of mainland companies fell for a third day, dropping 0.4 percent as early indicators for the last quarter of the year showed China’s economy is still showing a muted response to waves of monetary and fiscal easing. The Shanghai Composite Index added 0.9 percent and price swings in the gauge have fallen to an eight-month low.

Commodities

West Texas Intermediate crude dropped 1.4 percent to $42.26 a barrel, after jumping more than 6 percent over the previous two trading sessions. U.S. inventories probably expanded by 1 million barrels for a ninth weekly gain through Nov. 20, according to a Bloomberg survey before an Energy Information Administration report Wednesday.

Copper resumed losses, falling 0.7 percent in London, and zinc declined amid concern over Chinese demand. Copper, zinc and aluminum are trading near the lowest levels in six years, while nickel slumped this week to the lowest in more than a decade.

Currencies

The euro weakened 0.3 percent to $1.0616 after Reuters reported the ECB is considering options including broader bond purchases and a two-tiered charge on banks for deposits.

The ringgit jumped as much as 1.4 percent to a five-week high versus the dollar. Singapore’s dollar strengthened 0.5 percent after data showed the economy unexpectedly grew last quarter. The yuan climbed 0.2 percent in Hong Kong’s offshore trading, narrowing the gap with the currency’s onshore exchange rate.

The Bloomberg Dollar Spot Index, a gauge of the greenback’s strength, was little changed after a 0.3 percent retreat last session. The Conference Board’s index of consumer confidence fell to the lowest level since September 2014, data showed Tuesday, injecting an element of doubt into the picture of a robust U.S. economy.

Bonds

Euro-area government bonds advanced even amid a flurry of debt sales from across the region.

Italy’s 10-year bond yield declined four basis points to 1.47 percent. Benchmark German 10-year bund yields fell two basis points to 0.50 percent.

Bloomberg News