Dow average reaches another record while yen slides, oil gains

‘Ongoing Contraction’

The euro’s rise is unsustainable as investment dwindles and countries in southern Europe struggle to revive growth and reduce unemployment, said Julian Callow, chief international economist at Barclays Plc. The euro, which traded as strong as $1.3117 today, should be at $1.15, Callow said in an interview on Bloomberg Radio’s “Surveillance” with Tom Keene and Michael McKee.

“We’re still in a significant fiscal contraction in the euro zone,” Callow said. “There’s still a lot of deleveraging in the private sector if you look at the figures for bank lending, which is contracting very sharply still in southern Europe. That goes hand in hand with an ongoing contraction in the investment cycle.”

The Eurozone economy will shrink 0.3% in 2013, marking the first back-to-back annual contraction since the single currency’s birth in 1999, the European Commission forecast last month. A report today showed the French unemployment rate rose to a 13-year high of 10.6% in the fourth quarter as companies eliminated tens of thousands of jobs to cope with a stalled economy.

Aggreko Rally

Aggreko Plc jumped 10% in London, the most since 2008 on a closing basis, after the world’s largest provider of mobile power supplies reported higher annual profit and forecast “double digit” average revenue growth over the next five years. Adidas AG climbed 6.6% to a record as the second-largest sporting-goods maker forecast an increase in earnings.

Aviva Plc, the U.K.’s second-biggest insurer, plunged 13%, the most in almost four years, after cutting its second-half dividend by 44%. National Express Group Plc slid 11% as the rail and bus operator’s biggest investor, Elliott Advisors, sold a 9.9%  stake.

Sugar, natural gas and lean hogs jumped more than 3% to lead gains in 20 of 24 commodities tracked by the S&P GSCI Index. Natural gas surged more than 3% after government data showed U.S. inventories fell by more than forecast last week as cold weather boosted demand.

The MSCI Asia Pacific Index of shares fell 0.3%, retreating from 19-month high reached yesterday, as Chinese and South Korean stocks slumped. The yen weakened after Bank of Japan’s Masaaki Shirakawa’s final meeting amid speculation his successor will expand monetary stimulus and debase the currency.

China Watch

China’s exports probably grew 8.1% last month, slowing from January’s 25% gain, according to the median estimate of economists surveyed before tomorrow’s trade report. The Shanghai Composite Index slid 1 percent and South Korea’s KOSPI lost 0.8%, declining for the first time in three days.

The MSCI Emerging Markets Index slipped 0.1%. The Bovespa index advanced 1.5% today, adding to yesterday’s 3.6%  rally, as companies owned by the Brazilian billionaire Eike Batista gained after he signed a financing arrangement with Grupo BTG Pactual. Shares on the Nairobi Securities Exchange jumped 0.9%, climbing for a sixth day. The counting of presidential votes continues in Kenya, with partial results showing Uhuru Kenyatta, a deputy prime minister, in the lead.

The South Korean won weakened against all 16 major peers except the yen. The UN Security Council voted unanimously to impose tougher sanctions on North Korea for conducting a nuclear test explosion in violation of its previous prohibition.

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