U.S. stocks fall on bank earnings as Treasuries, nickel climb

Taper Talk

Slow price increases may cause Federal Reserve officials to remain cautious as the central bank tapers its unprecedented asset purchases. The bank’s $85 billion monthly buying pace slackened to $75 billion this month.

Federal Reserve Bank of Atlanta President Dennis Lockhart, who doesn’t vote on monetary policy this year, said yesterday he expects inflation that’s been “too low” will accelerate toward the Fed’s 2% target.

The yield on 10-year Treasuries fell 5 basis points to 2.84%, approaching a one-month low. The rate on 10-year German bunds dropped five basis points to 1.78% and the yield on U.K. gilts slid five basis points to 2.81%. Spain sold three-year notes at a record-low yield of 1.595%.

Developing nations are flooding markets with a record amount of bonds before Fed cuts in monetary stimulus spur funding costs. International sales are up 13% to $51.5 billion so far in January, the busiest start to a year since Bloomberg began tracking the data in 1999.

Emerging Stocks

The MSCI Emerging Markets Index slipped 0.2%. The Borsa Istanbul 100 Index posted the biggest decline among 94 world stock gauges.

Turkey’s lira dropped as much as 1% to 2.2102 per dollar, before trading 0.9% lower. South Africa’s rand declined as much as 0.7% to 10.9610, the lowest in more than five years.

The Ibovespa fell for the first time in three days as Petroleo Brasileiro SA declined after denying a report that it plans to raise fuel prices in Brazil.

The S&P GSCI Index of 24 commodities retreated 0.2%, erasing earlier gains, as gasoline dropped 1.3%.

Nickel futures climbed 1.1% in London for a fifth day of gains. The metal gained 9.6% in the past five sessions, the most since October 2011. Indonesia, the biggest producer of the mined metal, restricted shipments starting Jan. 12, fueling speculation supplies are poised to tighten.

Natural gas rose as much as 3.9% to a three-week high in New York on speculation that another push of cold air will stoke demand for the heating fuel.

European Shares

The European stocks benchmark fell for the first time in five days, losing 0.2% after closing yesterday the highest level since January 2008.

Fourteen of 19 main groups retreated, with banks and technology stocks losing the most. Banco Popolare SC lost 3.9% and Intertek Group Plc slid 3.4%.

A gauge of basic-resources companies led advances. Rio Tinto Group, the world’s second-largest mining company, rose 2.5% after exceeding its 2013 cost-cutting targets. Polymetal International Plc gained 5.7% and Fresnillo Plc rose 5.2% after brokerages raised their stock ratings on the companies.

www.bloomberg.com

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