May 11 (Bloomberg) -- Stocks and commodities fell, extending weekly declines, after JPMorgan Chase & Co. reported a $2 billion trading loss and China’s industrial output unexpectedly slowed. Treasuries rose, heading for their the longest run of weekly gains since Russia’s default in 1998.
The MSCI All-Country World Index slipped 0.5 percent at 9:30 a.m. in New York. The Standard & Poor’s 500 Index lost 0.5 percent as JPMorgan, the biggest U.S. bank by assets, tumbled 9.3 percent. The 10-year Treasury bond yield decreased three basis points and the Dollar Index advanced for a 10th day, its longest rally in almost four years. Cotton slumped 2.2 percent and oil declined 1.3 percent.
Banks led losses in stocks after JPMorgan’s Chief Executive Officer Jamie Dimon said an “egregious” failure on its synthetic credit securities led to losses in its chief investment office. China’s industrial production grew the least since 2009 in April, the National Bureau of Statistics said. Spain said it will force lenders to raise provisions against real estate holdings in the government’s fourth attempt to clean up the financial system.
“Clearly JPMorgan got it wrong,” said Shane Oliver, Sydney-based head of investment strategy at AMP Capital Investors Ltd., which has almost $100 billion under management. “I suspect it’s probably a one-off, but it comes during a week where we’ve seen risk off in a big way.”
The Stoxx Europe 600 Index slid 1 percent, extending this week’s decline to 1.8 percent. Vallourec SA plunged 21 percent, the biggest retreat since at least 1989, as the French producer of steel pipes for the oil and gas industry cut its sales growth forecast and reported profit that missed estimates. Telefonica SA, Spain’s biggest telecommunications company, fell 3.5 percent as first-quarter operating income trailed projections.
Banco Bilbao Vizcaya Argentaria SA of Spain dropped 4.4 percent and Banco Santander SA fell 3.8 percent..
Credit-default swaps insuring JPMorgan’s debt rose 19 basis points to 126, the highest since February, according to data compiled by Bloomberg.
A report today may show confidence among U.S. consumers declined in May from the highest level in a year. The Thomson Reuters/University of Michigan’s preliminary index of sentiment fell to 76 from 76.4 last month, according to the median of 68 forecasts in a Bloomberg survey of economists.
The MSCI Emerging Markets Index lost 1.2 percent, extending declines from this year’s March 2 high to 10 percent, the level that some investors consider to signal a correction. The Hang Seng China Enterprises Index slumped 1.4 percent. India’s Sensex Index slipped 0.8 percent as production at factories, utilities and mines declined in March.
Russia’s Micex Index fell 1.8 percent, with OAO MRSK Holding, the state-run power distributor, sinking 11 percent after Interfax reported it may be transferred under the management of Federal Grid Co.
The S&P GSCI gauge of 24 commodities dropped 0.8 percent. Cotton tumbled to a 21-month low. Gold futures were down 0.7 percent at $1,584.50 an ounce and close to erasing this year’s gain of 0.8 percent. Copper declined 1.6 percent. Oil fell as much as 1.5 percent in New York, heading for a second weekly drop.
Germany’s 10-year bund yield fell four basis points, while the yield on Greece’s 10-year note advanced 37 basis points, climbing for the ninth straight day. Greek political leaders go into a fifth day of talks today with Evangelos Venizelos, the socialist Pasok leader, set to press for a unity government that would avert a new election. Antonis Samaras, head of the New Democracy party, said today his sole condition for supporting a coalition government is that it guarantees Greece’s membership of the euro area.
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