By Andrea Tryphonides
The euro dipped to a fresh session low following downbeat
economic sentiment data from Germany, while stocks extended
declines and oil futures remained subdued, all despite a recovery
in the gold price on Tuesday.
German economic expectations deteriorated in April, falling for
the first time in five months, according to the ZEW survey.
Immediately after the results, the euro fell to $1,3028 against the
dollar, a low for the session.
Jennifer McKeown, a senior European economist at Capital
Economics, said the reading highlights investors' fears that the
German recovery will be short-lived.
"Given growing fears about troubles in Slovenia, Portugal and
Italy and their impact on the German economy and public finances,
we suspect that further falls in sentiment are to come," she said.
"While we still see Germany easily outperforming the rest of the
euro zone this year, we think that a strong and sustained recovery
is too much to hope for."
Separately, confirmation that euro-zone consumer price inflation
dropped to a 31-month low of 1.7% in March indicated that the
European Central Bank still has scope to take interest rates lower,
if necessary. The U.K. inflation rate remained at 2.8% in March
from February. Sterling, gilts and the Bund were steady.
Elsewhere, Spain's funding costs dropped sharply at a Treasury
bill auction Tuesday. The Spanish Treasury sold EUR5.07 billion
($6.63 billion) in six- and 12-month Treasury notes, topping the
targeted range. Meanwhile, Greece sold EUR1.63 billion of 13-week
Treasury bills at auction.
Gold bounced from a two-year low on Tuesday, having been
battered over the past two sessions, while European mining stocks
also recovered and foreign-exchange commodity plays looked steady
in Europe. Spot gold was at $1,382.60 a troy ounce, up $35.30 from
its previous close. The metal has lost nearly 13% since April
12.
Crude oil futures were still struggling--June Brent crude oil
futures remained just under the psychologically significant
$100-a-barrel mark.
In corporate news, shares in LVMH Moet Hennessy Louis Vuitton SA
(LVMUY) fell sharply following disappointing first-quarter sales.
The luxury goods retailer's fashion and leather division performed
particularly disappointingly.
Danone SA (DANOY) shares were up following a positive start to
2013, as strong demand for baby food in Asia helped stem declines
in Europe.
U.K. recruitment company Michael Page International PLC (MPGPY)
dropped sharply following its first-quarter interim management
statement. Analysts said results were at the lower end of
expectations.
U.S. stock futures were higher, indicating a positive start for
Wall Street Tuesday. On Monday, the Dow Jones Industrial Average
posted its biggest one-day point decline since Nov. 7, 2012.
Investors are gearing up for earnings from Goldman Sachs Group Inc.
later on Tuesday. In addition, inflation figures, housing figures
and industrial production data for March are all expected.
Write to Andrea Tryphonides at
andrea.tryphonides@dowjones.com
