Bloomberg: Dollar, Metals Slide on U.S. Growth Concerns

Dollar, Metals Slide on U.S. Growth Concerns
By Stephen Kirkland - Jun 1, 2011 6:14 PM GMT+0900

The dollar slid to a three-week low versus the euro before reports likely to show the U.S. recovery is cooling. German bunds dropped, while corn and sugar gained.

The dollar fell against 12 of its 16 major peers at 10:05 a.m. in London. Australia’s currency jumped 0.6 percent, snapping a two-day drop. The yield on 10-year German bunds added four basis points, and Portuguese two-year yields increased 26 basis points before a government auction. Corn climbed 0.7 percent and raw sugar rose for a sixth day. European stocks and futures on the Standard & Poor’s 500 Index were little changed.

U.S. manufacturing likely grew at the slowest pace since October and employers hired fewer workers in the world’s largest economy last month, economists said before economic reports today. Deficit cuts reminiscent of Belgian sacrifices in the 1990s and lenders willingness to roll over expiring bonds is a solution to keeping Greece solvent, Olli Rehn, the European Union’s economic and monetary affairs commissioner, said yesterday in New York.

“The pace of dollar weakening during the past week is noteworthy,” Greg Anderson, a senior currency strategist at Citigroup Inc. in New York, wrote in a research report today. “It certainly supports the notion that foreign-exchange markets are beginning to price in” additional bond purchases by the Federal Reserve to bolster the economy.

The Dollar Index fell for a second day, reaching the lowest since May 6. The U.S. currency was 0.2 percent weaker at $1.4427 per euro and 81.38 yen. Treasury 10-year yields were little changed at 3.07 percent, within three basis points of the least since Dec. 7. S&P 500 futures advanced less than 0.1 percent.

Manufacturing, Jobs

The Institute for Supply Management’s manufacturing index probably fell to 57.2 last month from 60.4 in April, according to the median estimate of 80 economists surveyed by Bloomberg News. Companies may have added 175,000 workers to their payrolls last month after a 179,000 April gain, economists said before a private report from the ADP Employer Services.

The 10-year bund yield climbed to 3.05 percent, after increasing by a similar amount yesterday. Portuguese two-year yields rose to 11.20 percent, while 10-year yields added 18 basis points to 9.79 percent. Portugal plans to sell as much as 1 billion euros ($1.4 billion) of 112-day Treasury bills.

Corn gained after the U.S. Department of Agriculture said 86 percent of this year’s crop was planted, down from 97 percent at this time last year. Sugar climbed 1.2 percent on harvest delays in Brazil, the world’s largest producer. Gold fell 0.3 percent to $1,531.10 an ounce and crude oil was little changed at $102.80 a barrel in New York.

Monte Paschi, Outokumpu

The Stoxx 600 slipped less than 0.1 percent. Banca Monte dei Paschi SpA sank 5.2 percent, the most in two months, as the Italian lender’s controlling shareholder sold 450 million shares. Outokumpu Oyj gained 5.4 percent after the Finnish maker of stainless steel said it will sell a 4.3 percent stake in Talvivaara Mining Co. to Solidium Oy.

The MSCI Emerging Markets Index advanced 0.3 percent, gaining for a fifth day, the longest streak in almost two months. Taiwan’s Taiex Index climbed 0.8 percent. The Bombay Stock Exchange Sensitive Index rose 0.3 percent as Morgan Stanley predicted a 19 percent rebound for the index this year.

Thailand’s SET Index slid 0.9 percent in Bangkok, before the central bank raised its benchmark one-day bond repurchase rate for the fourth time this year. Turkish banks led stocks lower in Istanbul after Goldman Sachs Group Inc. cut price estimates for lenders, citing weaker earnings and potential for changes in monetary policy.

To contact the reporter on this story: Stephen Kirkland in London at skirkland@bloomberg.net.

To contact the editor responsible for this story: Justin Carrigan at jcarrigan@bloomberg.net