S&P 500 extends worst month since May 2012 while oil retreats

L’Oreal Gains

L’Oreal SA advanced 4.9%, its biggest gain in six months, after the world’s largest cosmetics maker left open the option to buy back Nestle SA’s 29% stake in the company. L’Oreal Chief Executive Officer Jean-Paul Agon told French newspaper Les Echos that “we have the resources permitting us to envisage all opportunities.”

The European Commission’s index of executive and consumer sentiment in the 17-nation euro area climbed to 95.2 in August, from 92.5 in July. That exceeded the median economist forecast in a Bloomberg survey.

Treasuries headed for their longest stretch of monthly declines in more than two years amid speculation the Federal Reserve will reduce the pace of its monthly bond purchases. The yield on the benchmark 10-year note has risen 18 basis points since July 31, according to Bloomberg Bond Trader data.

The yen strengthened 0.2% to 98.19 per dollar and 0.4% to 129.75 per euro. Norway’s krone slid versus 15 of its 16 major counterparts.

Portugal’s Debt

Portuguese bonds declined after a court found that a proposed plan to end labor contracts for some state workers was unconstitutional, raising concern the government will struggle to meet its deficit targets. The yield on 10-year Portuguese securities climbed 19 basis points 6.77%, its highest level since July 22.

European corporate bonds lost 0.2% in August, the fourth month of declines in a year that has so far generated the worst return since 2008. Investment-grade debt in euros has returned 0.8% this year compared with 9% in the same period of 2012, Bank of America Merrill Lynch index data show.

The cost of insuring against losses on company debt rose today, with the Markit iTraxx Europe index of credit-default swaps on 125 high-grade borrowers increasing 1.4 basis points to 106.2.

Emerging Markets

The MSCI Emerging Markets Index climbed 0.9%, extending its two-day gain to more than 2%, the biggest in more than a month. The gauge has still fallen 2% in August.

The SET Index in Thailand increased 0.1%, paring its retreat this month to 9.1%.

The Indian rupee strengthened 1.3% to 65.71 per dollar after earlier weakening as much as 1.3%. Economic growth probably fell to 4.7% in the second quarter from 5.4% a year earlier, according to the median estimate of 44 economists in a Bloomberg survey. Indian Prime Minister Manmohan Singh said the government’s push to bolster growth will support the rupee, which plunged to a record low earlier this week.

www.bloomberg.com

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