U.S. stocks drop on budget concern while euro, Treasuries gain

Market Movers

Alcoa Inc. slumped as Moody’s Investors Service placed the aluminum producer under review for a credit downgrade. General Motors Co. jumped on plans to purchase 200 million shares from the government. Oracle Corp. gained after profit and sales beat estimates. Knight Capital Group Inc. rose after agreeing to be bought by Getco LLC.

Smith & Wesson Holding Corp. and Sturm Ruger & Co. rebounded after sliding for three days following a school shooting in Newtown, Connecticut, that killed 20 children and six adults. Smith & Wesson rose as much as 9.9 percent today after plunging 18 percent in the previous three sessions, its biggest drop in three years. The stock had more than doubled this year before the Dec. 14 shooting.

Obama said his administration will come up with “concrete proposals” by next month to help stem gun violence and endorsed restrictions on military-style assault weapons and high-capacity ammunition clips. Obama said there is a growing consensus in the country for restricting high-powered weapons and urged Congress to hold votes on such measures early next year.

Oil Climbs 

Oil rallied 1.8 percent to $89.51 a barrel, its highest settlement price in two months, and gasoline and heating oil climbed more than 1 percent to lead gains in the S&P GSCI Index of commodities after the U.S. Energy Department said crude stockpiles decreased last week. The S&P GSCI increased 0.7 percent, even as 13 of its 24 commodities retreated. Copper declined 1.2 percent as rising inventories signal demand is weakening. Natural gas futures dropped 2.9 percent, halting a two-day rally, as weather forecasts for late December and early January turned warmer.

European Markets 

The Stoxx Europe 600 Index advanced 0.4 percent to the highest level since May. The regional benchmark is up 15 percent this year. HSBC Holdings Plc advanced 2 percent as banking shares contributed the most to the index’s advance. Stada Arzneimittel AG jumped 5.4 percent. Merck KGaA lost 2.1 percent after an experimental drug missed the main goal in a trial with lung-cancer patients.

UBS AG slipped 0.3 percent after it was today fined $1.5 billion by U.S., U.K. and Swiss regulators for trying to rig global interest rates, three times more than the 290 million pounds ($472 million) Barclays Plc agreed to pay in June.

Germany’s Ifo institute’s business climate index, based on a survey of 7,000 executives, climbed to 102.4 from 101.4 in November. That’s the second straight increase after sentiment dropped to a 2 1/2-year low in October. Economists predicted a reading of 102, according to the median of 43 forecasts in a Bloomberg News survey.

Ten-year German bund yields rose to the highest level in more than two weeks, advancing two basis points, or 0.02 percentage point, to 1.43 percent. The euro was stronger against 13 of 16 major peers.

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