Stocks, Commodities, Euro Drop on Economy as Treasuries Advance

March 22 (Bloomberg) -- Stocks and commodities dropped while Treasuries rose for a third day after manufacturing contracted in Europe and China and FedEx Corp. predicted slower growth, undermining confidence in the global economy.

The Standard & Poor’s 500 Index slipped 0.6 percent to 1,393.99 at 9:32 a.m. in New York and the Stoxx Europe 600 Index fell for a fourth straight day. The euro depreciated 0.5 percent to $1.3155. Ten-year Treasury yields decreased four basis points to 2.26 percent, and the rate on the German bund decreased six basis points to 1.92 percent. Copper and oil plunged more than 2 percent and nickel retreated to the lowest price this year.

A gauge of European manufacturing fell to 47.7 as factory output unexpectedly shrank in Germany and France, according to London-based Markit Economics. A preliminary measure of Chinese manufacturing slipped to 48.1 in March, the lowest level in four months, based on figures from HSBC Holdings Plc and Markit Economics. FedEx, operator of the world’s largest cargo airline, predicted “below-trend” growth in coming quarters.

“I am not confident on the macro outlook,” said Filippo Garbarino, Chiasso, Switzerland-based manager of the Frontwave Capital Ltd. fund. “Every small macro disappointment is an excuse to realize capital gains and become more defensive. My net exposure to Europe at the moment is zero.”

The S&P 500 retreated for a third day as concern about global growth overshadowed a drop in jobless claims to a four- year low. Initial applications for unemployment benefits decreased by 5,000 to 348,000 in the week ended March 17, the fewest since February 2008, Labor Department figures showed today. The median forecast of 46 economists in a Bloomberg News survey projected 350,000.

 LEI Forecasts

The index of leading economic indicators rose 0.6 percent in February following a 0.4 percent gain in January, a report by the Conference Board may show, according to a Bloomberg survey of economists.

The Stoxx 600 declined to the lowest level since March 13 as mining and construction companies led losses. Randgold Resources Ltd., which operates three mines in Mali, plunged 12 percent as an army officer said the West African country’s government has been overthrown. Baloise Holding AG sank 6.2 percent as Switzerland’s third-largest insurer said profit dropped 86 percent last year.

Yields on 10-year and 30-year Treasuries retreated for a third straight day after reaching the highest levels in more than four months on March 19. The 30-year bond rate decreased three basis points to 3.36 percent.

The euro fell for a third day versus the dollar. The yen gained against all 16 of its major peers, advancing 1.1 percent versus the euro and 1.5 percent against Australia’s currency. Japan’s exports unexpectedly exceeded imports by 32.9 billion yen ($395 million) in February, the government said. The Dollar Index rose 0.3 percent.

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