Wells Fargo & Co. (NYSE:WFC), the most valuable U.S. bank, posted second-quarter profit last week that rose 3.8 percent on lower credit costs, while Citigroup Inc. (NYSE:C) said yesterday that net income fell 96 percent as the company agreed to pay $7 billion to resolve a mortgage-related probe. Bank of America Corp. (NYSE:BAC), the second-biggest U.S. lender by assets, is scheduled to report results tomorrow.
Lorillard Inc. dropped 7.3 percent after Reynolds American Inc. reached an agreement to buy its rival for $27.4 billion including debt. Reynolds lost 3.4 percent.
The Stoxx Europe 600 Index sank 0.4 percent after yesterday rallying the most in a week. Software AG declined 17 percent after the German company lowered its operating-margin forecast, dragging technology companies down for the second-biggest decline among 19 industry groups. Draegerwerk AG slumped 18 percent after the German maker of medical equipment cut its projection for sales growth.
Banco Espirito Santo SA’s subordinated bonds and stock tumbled as 847 million euros ($1.15 billion) of short-term debt sold by a company linked to the Portuguese lender falls due today. Rioforte Investments SA, a holding company of the troubled Espirito Santo group, owes the money to Portugal Telecom SGPS SA, according to a June 30 regulatory filing by the nation’s biggest phone company.
The lender’s 7.125 percent notes due November 2023 dropped 7.8 cents on the euro to a record 72 cents, with the yield rising to 12.1 percent, according to data compiled by Bloomberg. Banco Espirito Santo’s shares slumped 20 percent to 35.5 euro cents, a record low for data going back to 1993.
Britain’s pound advanced 0.5 percent to $1.7163 and added 0.6 percent to 79.26 pence per euro. The Office for National Statistics said annualized U.K. inflation was at 1.9 percent in June from 1.5 percent the prior month. That compares with 1.6 percent forecast by analysts in a Bloomberg survey.
The dollar strengthened 0.1 percent to 101.63 yen from 101.54 yesterday.
The MSCI Emerging Markets Index rose 0.2 percent, heading for the highest close since March 2013. South Korea’s Kospi index jumped 0.9 percent, advancing for a second day, as exporters gained.
China reports second-quarter gross-domestic product tomorrow, with analysts expecting a 7.4 percent expansion from a year earlier. June retail sales and industrial production are also due.
Dubai stocks rose, sending the benchmark index back into a bull market three weeks after a selloff ended the longest rally since 2005, as investors bet Arabtec Holding Co. will keep state backing. The DFM General Index climbed 3.4 percent.
The won slid 0.9 percent versus the dollar. Incoming Finance Minister Choi Kyung Hwan said in a July 8 nomination hearing that exchange-rate stability is important, raising the prospect of intervention after the won gained the most among major currencies in the second quarter.
Corn dropped after rebounding from a four-year low yesterday and wheat declined 0.5 percent. Seventy-six percent of corn and 72 percent of soybeans were in good or excellent condition as of July 13, the best shape for that time of year since 1994, U.S. Department of Agriculture data released yesterday show.
West Texas Intermediate oil fell 1.8 percent to $99.09 a barrel in New York. Futures slid amid signs of a recovery in Libyan exports, stable output in Iraq and the highest U.S. crude production in almost three decades.
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