Stocks drop with commodities on Fed concern as yen strengthens

Verizon, P&G

Verizon Communications Inc. slumped 3% and Procter & Gamble Co. lost 2.4% to pace losses among the biggest U.S. companies. Lennar Corp. and PulteGroup Inc. fell at least 2.3% as investors sold shares of homebuilders.

Mortgage applications in the U.S. dropped last week for a third consecutive time as the highest borrowing costs in a year triggered a slump in refinancing. The Mortgage Bankers Association’s index fell 8.8% in the period ended May 24 from the prior week. The group’s refinancing measure slumped 12.3% to the lowest level of the year, while its purchasing measure climbed 2.6%.

The average rate on a 30-year fixed mortgage jumped to 3.90%, the highest level since May 2012, from 3.78% in the prior week. The 0.31 percentage-point surge over the past three weeks has been the biggest over a similar period since early February 2011.

Almost 13 shares dropped for every one that gained in the Stoxx 600 while volume was 7.1% less than the 30-day average. The decline pared this month’s advance to 2% as the gauge headed for the longest monthly winning streak since 1997.

Evraz Plc slid 2.7% after Stoxx Ltd. said it will remove the company from the Stoxx 600 before the start of trading on June 24. Hennes & Mauritz AB dropped 2.5% as Goldman Sachs Group Inc. recommended investors sell the shares.

Emerging Markets

The MSCI Emerging Markets Index snapped a three-day advance, falling 1%. The Hang Seng China Enterprises Index of mainland companies listed in Hong Kong sank 1.6%. China’s expansion will be 7.75% this year and next, David Lipton, first deputy managing director of the IMF, said in Beijing today. In April, the IMF predicted growth of 8% this year and 8.2% in 2014.

The Organization for Economic Cooperation and Development forecast global economic growth will accelerate in 2014 with both the U.S. and Japan continuing to outpace the euro area.

“The global economy is moving forward and it is doing so at multiple speeds,” OECD Chief Economist Pier Carlo Padoan said today in the Paris-based organization’s semi-annual Economic Outlook. Differing monetary and fiscal choices across the major developed economies are driving regional divergence with “each path carrying its own mix of risks,” he said.

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