European stocks dropped from a one-month high, gold climbed and the ruble slid as the U.S. said Russia has probably sent troops to fight in Ukraine.
The Stoxx Europe 600 Index retreated 0.7 percent at 7:28 a.m. in New York, while futures on the Standard & Poor’s 500 Index fell 0.3 percent. Gold and silver rose for a third day. Russia’s Micex Index lost 1.8 percent and the ruble weakened against every major currency, trading close to its lowest level since the incursion into Crimea began in March. Spanish sovereign debt declined for the first time in eight days, while the yield on 10-year German bunds fell to a euro-era low.
The State Department said that Russian troops are probably fighting alongside separatists in eastern Ukraine. The FBI is investigating whether hacking attacks
against banks including JPMorgan Chase & Co. were made in retaliation to U.S. sanctions against Russia. The U.S. updates markets on its economic growth in the second quarter at 8:30 a.m. Washington time.
The Stoxx 600 “index has had a pretty nice rise over the past few weeks and investors may be taking some money off the table in case the U.S. data doesn’t meet expectations,” Ben Kumar, an investment manager who helps manage about $10 billion at Seven Investment Management LLP in London, said by phone.
European equities retreated after the Stoxx 600 reached its highest valuation in a month yesterday. The index’s constituents traded at 15.5 times estimated earnings yesterday, higher than their five-year average price-earnings ratio of 12.6, according to data compiled by Bloomberg.
Commodity Producers
Mining companies led losses in Europe, with BHP Billiton Ltd. and Rio Tinto Group, the world’s two largest commodity producers, each dropping more than 1.5 percent.Ocado Group Plc (OCDO) slumped 13 percent after Redburn Europe Ltd. almost halved its price forecast for the shares. The company is the online distributor of groceries for Waitrose Ltd. and Wm Morrison Supermarkets Plc.
Gemalto NV dropped 2.4 percent after the software maker posted first-half sales that missed analysts’ estimates. Bureau Veritas (BVI) SA slumped 8.4 percent after the French provider of testing, inspection and certification services lowered its earnings forecast through 2015. Wendel, the investment company which owns 51 percent of Bureau Veritas, fell 7.1 percent.
CSR Plc surged 29 percent after the Financial Times reported that the chipmaker has received takeover offers from rival semiconductor makers. CSR subsequently said it had rejected an approach from Microchip Technology Inc.
Russian Equities
The MSCI Emerging Markets Index slipped from a three-year high as Russian stocks fell. The Micex had rallied 5 percent in August before trading opened today. MSCI’s benchmark for developing-nation equities declined for the first time in five days, losing 0.5 percent.The ruble weakened 1.5 percent against the dollar, the most among 24 emerging markets. Ukraine’s 2017 Eurobond fell for a seventh day. That sent the yield 85 basis points higher to 11.78 percent, its biggest jump since the beginning of May.
U.S. State Department spokeswoman, Jen Psaki, cited reports of renewed fighting, telling reporters in Washington yesterday that “these incursions indicate a Russian-directed counter-offensive is likely under way in Donetsk and Luhansk.” Russian President Vladimir Putin’s spokesman, Dmitry Peskov, said “this information doesn’t correspond with reality.”
Ukraine’s government said the fighting has spread to the shores of the Sea of Azov, effectively opening a new front.
Gold, Silver
Gold for immediate delivery advanced 0.7 percent to $1,291.81 an ounce in London trading. Silver climbed as much as 2.3 percent, the most since July 17. Platinum also rose for a third day, gaining 0.6 percent. Palladium added 0.5 percent to its highest price since Aug. 18.West Texas Intermediate crude oil fell 0.4 percent in New York to $93.51 a barrel, while Brent crude was 0.2 percent lower at $102.56 in London trading.
Wheat futures rose 0.8 percent to $5.6675 a bushel on the Chicago Board of Trade, gaining for a third day.
The yield on Spain’s 10-year bonds climbed five basis points to 2.194 percent, while the rate on Italian debt of a similar maturity rose four basis points to 2.434 percent. Germany’s (GDBR10) benchmark 10-year yield dropped four basis points to 0.870 percent and rates in France, Holland, Belgium, Austria and Finland all set record lows.
German annual inflation, calculated using an European Union harmonized method, held at 0.8 percent this month, the Federal Statistics Office will say at 2 p.m. in Wiesbaden today, according to the median estimate of economists in a Bloomberg News survey.
Annual euro-area inflation slowed to 0.3 percent, the lowest since October 2009, and less than a quarter of the European Central Bank’s target, a report will show tomorrow, according to a separate survey.
The dollar slid 0.2 percent to $1.3215 per euro and weakened 0.2 percent to 103.71 yen. The euro was little changed at 137.04 yen.
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