U.S. Stocks, Copper Drop; Euro Weakens

U.S. Stocks, Copper Drop; Euro Weakens, Treasuries Rise

By Stephen Kirkland

July 12 (Bloomberg) -- U.S. stocks fell, with the Standard & Poor’s 500 Index snapping a four-day rally, as investors awaited the start of earnings season and a third month of declining Chinese imports drove down copper. The euro weakened and Treasuries rose.

The S&P 500 lost 0.1 percent to 1,077.12 at 9:37 a.m. in New York. The MSCI World Index of stocks in 24 developed nations slipped 0.2 percent. Copper slumped 1.7 percent in London and aluminum and oil also retreated. The euro depreciated 0.6 percent against the dollar. Ten-year Treasury yields lost one basis point and Japan’s 10-year note slipped three basis points.

China’s iron ore and copper imports dropped last month from May, the third straight decrease, damping the outlook for demand from the world’s fastest-growing major economy. European finance ministers meet today in Brussels to debate how much of the detail of bank stress tests to disclose before releasing results by the end of July. In the U.S., investors awaited Alcoa Inc. to get the second-quarter earnings season under way.

“The earnings season is likely to herald mixed results, prospects for robust corporate earnings are good, those for financial-sector earnings less so,” Michael Hart, a currency strategist at Citigroup Inc. in London, wrote in a report. “The European bank stress tests hang over the market like a Damocles’ sword, but even the scheduled publication on July 23rd is unlikely to bring either relief or resolution.”

Alcoa, Qualcomm

The S&P 500 halted its longest streak of gains in two months. Alcoa, the largest U.S. aluminum producer, slipped 0.5 percent before it reports results after the close in New York today. Companies in the S&P 500 are projected to post an average profit gain of 34 percent, according to analysts’ estimates compiled by Bloomberg.

Hewitt Associates Inc. jumped 33 percent after Aon Corp., the world’s largest insurance broker, agreed to buy the company for $4.9 billion in cash and stock. Qualcomm Inc., the largest phone-chip producer, rose 1.8 percent after Goldman Sachs Group Inc. added the stock to its “conviction buy” list on accelerating smartphone growth.

The Stoxx Europe 600 Index climbed 0.3 percent, extending its advance to five days. The MSCI Asia Pacific Index dropped for the first time in three days, losing 0.1 percent. Kontron AG sank 17 percent in Frankfurt after the maker of miniature computers for slot machines and drone aircraft said it’s setting aside 34 million euros ($43 million) for outstanding debts. Zodiac Aerospace SA advanced 6.3 percent in Paris after rejecting a takeover approach from Safran SA. Mitsubishi UFJ Financial Group Inc., Japan’s biggest bank by market value, dropped 2.1 percent in Tokyo.

BP, Exxon

BP Plc, battling to contain the biggest oil spill in U.S. history, rose 8.5 percent in London after the Sunday Times said Exxon Mobil Corp. may bid for the company and reports that it’s selling assets in Alaska. The cost of insuring BP’s debt fell, with credit-default swaps on the company dropping 35.5 basis points to 335.5, the lowest since June 8, according to CMA DataVision. BP is working to install a new, tighter-fitting cap over its leaking well in the Gulf of Mexico, Senior Vice President Kent Wells said yesterday.

Crude oil for August delivery declined 0.6 percent to $75.64 a barrel on the New York Mercantile Exchange. Copper for delivery in three months lost 1.7 percent to $6,646.50 a metric ton on the London Metal Exchange. Aluminum slid 1 percent to $1,985 a ton.

The euro weakened to $1.2562, falling against 15 of its 16 most-traded peers. The yen was little changed at 88.59 per dollar.

Treasuries

The 10-year Treasury yield dropped to 3.05 percent. The U.S. plans to auction $35 billion of three-year notes today, the first of three sales this week totaling $69 billion. The yield on the Japanese 10-year note fell to 1.11 percent after the country’s ruling party was defeated in elections to the upper house of parliament.

The MSCI Emerging Markets Index rose 0.3 percent, advancing for a third day. Developers and banks led gains in China on speculation the government will relax curbs on mortgage lending after property-price gains slowed. The Shanghai Composite Index jumped 0.8 percent.