Energy companies surged on the highest crude prices in eight
months as violence in Iraq spurred supply concerns. The yen dropped
with India’s rupee while the U.K. pound strengthened a second day and
metals rose.
A measure of oil and gas firms in the Stoxx Europe 600
Index jumped 0.7 percent by 8:15 a.m. in London, with a similar gauge
in Asia (MXAP) advancing 0.9 percent. Standard & Poor’s 500 Index
futures added 0.1 percent. West Texas Intermediate oil rose 0.9 percent and
Brent added 0.9 percent. India’s rupee fell to a one-month low and the yen
dropped 0.3 percent. The pound climbed 0.3 percent while copper rose 0.7
percent. Five-year U.S. Treasury yields climbed three basis points.
Escalating violence in Iraq is raising the prospect of further
disruptions in OPEC’s second-biggest oil producer. The yen dropped from the
strongest this month as the Bank of Japan kept record stimulus
unchanged, a move predicted by all 33 economists in a Bloomberg News survey.
Growth in China’s retail sales, industrial production and fixed-asset
investment came in as estimated today, after the country reported new loans
that beat forecasts.
“The Iraq situation has the potential to become more
significant, so people are naturally concerned,” said Angus Gluskie, a
fund manager who helps oversee more than $550 million at White Funds Management
in Sydney. Any pullback will be limited because “the underlying factors that
have driven the market higher haven’t really changed. They’re still reasonably
strong.”
Energy, resources and utility stocks were the only three groups
of 19 industries on the Stoxx 600 to advance today. The European gauge is
little changed for the week after eight straight weekly advances.
Militants Attack
Iraqi forces sought to check the rapid advance of Islamist
militants who had seized major cities, as Prime Minister Nouri al-Maliki
responded to the greatest threat to his government since taking power. The
Shiite-led government is struggling to retain control of Sunni-majority
regions, and al-Maliki’s army units in northern Iraq collapsed in the face of
the Islamist advance.
WTI traded at $107.31 a barrel, the highest level since Sept.
19. Brent cost $113.91, the most since Sept. 9.
Total SA added 0.7 percent and Royal Dutch Shell Plc
(RDSA) climbed 0.6 percent, with both companies extending yesterday’s
gains. CNOOC Ltd., China’s biggest oil refiner, jumped 2.1 percent and was the
top support for the Hang Seng Index, which added 0.7 percent. PetroChina Co.,
the country’s No. 1 producer, advanced 0.9 percent in Hong Kong.
Inpex Corp., Japan’s largest energy explorer, surged 4.5 percent
in Tokyo, the most on the Asia-Pacific gauge, and South Korea’s SK
Innovation Co. added 3.5 percent.
‘Serious Situation’
“There’s potential for disruption to spread around the Middle
East and we’re talking about significant amounts of daily supply,” Michael
McCarthy, a chief strategist at CMC Markets in Sydney who predicts Brent may
climb to $125 a barrel if there’s an attack on Baghdad. “The market got
concerned about potential disruption in Libya; Iraq is a much more serious
situation.”
President Barack Obama said he won’t rule out using
airstrikes to assist Iraq’s government. Iraq “clearly is an emergency
situation” and the government there needs more help, Obama said.
India’s rupee weakened 0.4 percent to 59.4637 to the greenback,
the lowest since May 15, as investors bet soaring oil prices will add to the
country’s balance-of-payments woes. India is the world’s fourth-largest
consumer of oil. The U.S., China and Japan are the top-three users of the fuel.
Yen Drop
The yen slid to 101.95 per dollar, heading for a 0.5 percent
gain since June 6. The BOJ, led by Governor Haruhiko Kuroda, has kept its
policy since April 2013 in stimulus that tends to weaken the currency. Nine
percent of economists surveyed from June 3 to 6 predicted extra monetary
stimulus in July, down from 38 percent in the previous survey.
“The BOJ is likely to remain inactive for the next several
months,” said Maiko Noguchi, senior economist at Daiwa Securities Co. in Tokyo
and a former central bank official. “Inflation will start to diverge from its
outlook without a boost from a weaker yen, and the central bank will have to
respond later this year.”
China’s yuan climbed 0.2 percent in onshore trade
today to 6.2065 per dollar. It earlier climbed to 6.2056, taking its weekly
advance to 0.7 percent, the most since August 2011.
The U.K. pound climbed to $1.6973, extending yesterday’s 0.8
percent advance. Bank of England Governor Mark Carney said the central bank may
raise interest rates from a record low earlier than investors expect and
expressed concern that mounting debt related to the housing market could
undermine stability.
Copper climbed to $6,664 a ton and nickel jumped 0.8 percent.
Gold was little changed after jumping 1 percent, the most in five weeks, and
silver extended its 1.9 percent advance yesterday.
To contact the reporters on this story: Jonathan Burgos in
Singapore at jburgos4@bloomberg.net; Nick Gentle in Hong Kong
at ngentle2@bloomberg.net
To contact the editors responsible for this story: Nick Gentle
at ngentle2@bloomberg.net Sandy Hendry
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