Treasuries halt six-day drop while Dow fluctuates near record

Volume, Volatility

The Stoxx Europe 600 Index closed up 0.1%. The volume of shares changing hands in Stoxx 600 companies was 9.7% lower than the 30-day average today after the gauge rallied to a 4 1/2-year high last week. S&P 500 trading was 14% below average at this time of day.

The VStoxx Index, which gauges the cost of hedging against moves in the Euro Stoxx 50 Index, fell 1.7% to 17.32, a one-month low. In the U.S., the Chicago Board Options Exchange Volatility Index rose 7.7% to 12.45 after sliding to the lowest level in more than six years yesterday.

“Sentiment is ahead of reality and stock markets are one or two steps ahead of the real economy,” said Pang Cheng Duan, a managing director in Singapore at Manulife Asset Management, which oversees about $45.3 billion in Asia. “The rally cannot go on liquidity alone, and we need more impetus like better corporate earnings.”

The yen snapped a four-day drop against the dollar and euro after an opposition lawmaker said the Democratic Party of Japan would oppose the nomination of Kikuo Iwata for deputy governor of the central bank, damping bets for greater monetary stimulus.

U.K. Assets

The pound weakened against 11 of its 16 major peers. Industrial production fell 1.2% from December, when it rose 1.1%, the Office for National Statistics said today in London. The median forecast in a Bloomberg News survey of 29 economists was for a 0.1% increase.

The yield on 10-year U.K. gilts tumbled five basis points to 1.96%. The yield on British securities fell below their U.S. counterparts for the first time in five months yesterday. Spanish bonds advanced for a 10th day, the longest rally since August 2005.

The Hungarian forint retreated 1.3% versus the euro, falling to a nine-month low, as inflation slowed. The rand weakened against all 16 major peers after South Africa posted a current-account shortfall.

The MSCI Emerging Markets Index fell 0.5%, declining for a second day. The Shanghai Composite Index slid 1% to lead declines, falling for a fourth day in the longest stretch of losses since November, on speculation regulators may resume initial public offerings.

The Standard & Poor’s GSCI gauge of 24 raw materials increased 0.2% as zinc, lead and aluminum climbed more than 1% to lead gains. Gold futures for April increased 0.9% to $1,592.10 an ounce, the highest level of the month.

Bloomberg News

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