Global stocks slide as industrial metals tumble, euro weakens

Euro Weakens

The euro extended losses versus the yen and dollar after Dow Jones reported Bundesbank President Jens Weidmann said the European Central Bank may cut interest rates if new information warrants the move.

Italy’s borrowing costs dropped to near the lowest in three months, with 2-year yields losing six points to 1.38%. The yield on Slovenia’s 2022 dollar bonds sank 48 basis points to 5.83%. Slovenia, the first post-communist nation to adopt the euro, sold 1.1 billion euros ($1.4 billion) of 18- month bills, more than double the amount planned

The G-20 finance ministers and central bankers meet for two days from tomorrow in Washington before International Monetary Fund and World Bank talks. New York Fed President William C. Dudley and his Chicago counterpart Charles Evans stressed the need for stimulus yesterday.

Copper, crude oil and gasoline lost more than 2% to lead commodities lower. Oil prices dropped as much as 3% after the Energy Information Administration said output climbed to 7.2 million barrels a day, the most since July 1992, and gasoline and diesel demand decreased. BNP Paribas SA cut its 2013 forecasts for Brent and WTI.

Spot gold rebounded for a second day after falling 9.1% two days ago, the most in three decades. Gold futures for June delivery fell 0.6% to $1,379.90 an ounce.

Investors are dumping gold funds at the fastest pace in two years in favor of equities, compounding a slump that has wiped $560 billion from the value of central bank reserves.

Gold ETFs

Exchange-traded products linked to gold dropped $37.2 billion in 2013 as the metal reached a two-year low yesterday. Gold funds suffered net outflows of $11.2 billion this year through April 10, the most since 2011, while global and U.S. equity funds had net inflows of $21.25 billion, according to Cambridge, Massachusetts-based EPFR Global.

Central banks are among the biggest losers because they own 31,694.8 metric tons, or 19% of all the gold mined, according to the World Gold Council in London. After rallying for 12 straight years, the metal has tumbled 28% from its September 2011 record of $1,923.70 an ounce.

Carbon Plunges

Carbon permits under the European Union’s emissions-trading system slipped 11% to 2.75 euros a metric ton in London. The December 2013 carbon contract plunged 35% yesterday, the most on record, after lawmakers rejected an emergency plan to address a surplus of allowances.

The Swedish krona weakened after policy makers pushed back the timing of likely interest-rate increases. The krona slid to its weakest level since February against the euro, dropping as much as 1.3%. Sweden’s central bank left its benchmark interest rate unchanged for a second meeting and delayed tightening to the second half of 2014 after the appreciation of the currency brought inflation to standstill.

The MSCI Emerging Markets Index slipped 0.9%, reversing earlier gains of as much as 0.4%. Brazil’s Bovespa sank almost 2%.

Bloomberg News

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