Most U.S. stocks slip after two-day rally; corn reaches record

Further Easing

“It’s increasingly likely that the Fed and European Central Bank will ease further by September,” said Masamichi Adachi, a senior economist at JPMorgan Securities in Tokyo and a former central bank official. In Japan, the government may implement a supplementary budget by September, with the central bank expanding asset purchases, Adachi said.

The Stoxx 600 has gained for eight straight weeks, its longest rally in more than six years. Air France-KLM Group surged 19 percent as Europe’s biggest airline reported a narrower-than-estimated loss. JC Decaux SA sank 6.9 percent after the French billboard company said so-called organic revenue was lower than forecast in the second quarter.

The euro declined 0.8 percent versus the yen, falling for the first time in four days.

Krona Rallies

The Swedish krona rose against all 16 of its most-traded peers, appreciating 1.7 percent against the euro and 1.2 percent versus the dollar after Statistics Sweden data showed gross domestic product unexpectedly accelerated in the second quarter. GDP grew 1.4 percent, beating a median forecast for a gain of 0.2 percent in a survey of economists by Bloomberg.

The cost of insuring European corporate and sovereign bonds using credit-default swaps declined for a fourth day. The Markit iTraxx Crossover Index of swaps on 50 mostly junk-rated European companies fell 19 basis points to 622. The Markit iTraxx SovX Western Europe Index tied to the debt of 15 governments dropped nine basis points to 256.5.

Draghi’s proposal involves Europe’s rescue fund buying government bonds on the primary market, buttressed by ECB purchases on the secondary market to ensure transmission of its record-low interest rates, two central bank officials said July 27 on condition of anonymity. Further ECB rate cuts and long- term loans to banks are also up for discussion, one of the officials said.

‘Structural Adjustment’

“Given the sheer scale of the structural adjustment that is still needed in Europe and accelerating capital flight from peripheral countries to the core, it will take extraordinary efforts from the ECB to implement lasting solutions,” said Kaha Kiknavelidze, London-based managing partner at Rioni Capital Partners LLP, an emerging-markets hedge fund that manages $30 million.

Draghi must now deliver or face a renewed selloff on bond markets, where soaring Spanish and Italian yields have fueled speculation that the monetary union could fall apart. The ECB chief is also attempting to win over Bundesbank President Jens Weidmann, a critic of ECB bond purchases.

Figures tomorrow may show euro-area unemployment climbed to a record 11.2 percent last month, a Bloomberg survey showed.

Italian 10-year bonds stayed lower after the nation sold 5.5 billion euros ($6.8 billion) of government debt due between 2015 and 2022. The 10-year yield climbed seven basis points to 6.03 percent. The rate on Italian five-year notes added three basis point to 5.38 percent after increasing as much as 12 points earlier.

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