Euro, Asia Stocks Fall as EU Leaders Withhold Aid

The euro sank to near a three-week low against the dollar, Asian stocks and U.S. equity futures sank, while bond risk rose after European leaders cut off aid payments to Greece before a referendum on a bailout deal. New Zealand’s dollar fell after the nation’s jobless rate gained.

The 17-nation euro lost 0.4 percent to $1.3699 as of 1:23 p.m. in Hong Kong, while the so-called kiwi weakened 0.9 percent. The MSCI Asia Pacific excluding Japan Index slid 0.8 percent and Standard & Poor’s 500 Index futures fell 1.1 percent. Treasury 10-year futures contracts climbed a fifth day. The Markit iTraxx Asia index of debt-default risk gained nine basis points. Oil and silver dropped at least 1 percent.

German and French leaders holding emergency talks on the eve of a Group of 20 summit in Cannes, France, withheld 8 billion euros ($11 billion) of assistance. They warned Greece will surrender all European aid if it votes against a bailout package agreed last week to contain the crisis. European Central Bank President Mario Draghi will chair later today a meeting of the bank’s governing council for the first time.

“The market is eventually going to send Greece an incremental message about the jeopardy and hazards of going it alone and punching out of Europe,” Erik Ristuben, the New York- based chief investment officer at Russell Investments, told Bloomberg Television. “It will be[You must be registered and logged in to see this link.] a very negative event in our minds, economically, for Greece even more so than the austerity measures that core Europe is pushing on them.”

The euro weakened 0.4 percent to 106.91 yen after European leaders said a referendum in five weeks will determine whether Greece becomes the first to exit the 17-nation currency bloc.
‘Wider Consensus’

Greek Prime[You must be registered and logged in to see this link.] Minister George Papandreou, who faces a confidence vote tomorrow, defended his decision to call a referendum, telling reporters at a separate press briefing that the country “needs a wider consensus” for the bailout terms and expressing confidence it will back staying in the euro.

The kiwi depreciated to 78.41 U.S. cents after Statistics New Zealand said the jobless rate rose to 6.6 percent in the third quarter from 6.5 percent in the prior three months. Australia’s dollar declined 1 percent to $1.0248 and South Korea’s won retreated 0.8 percent to 1,130.90 per dollar, a fourth day of losses.

The yuan advanced 0.14 percent to 6.3482 Shanghai, the biggest increase in a week, as China’s central bank set a record daily reference rate and signaled before the G-20 summit it will increase moves in the exchange rate. The government remains open to increased flexibility of the yuan, Zhang Tao, director general of the international department of the People’s Bank of China, said yesterday.
Bank Earnings

More than two shares declined for each one that gained in the MSCI Asia Pacific ex-Japan Index. Japanese financial markets are closed for a holiday. Hong Kong’s Hang Seng Index declined 1 percent, South Korea’s Kospi Index sank 1.2 percent, and Taiwan’s Taiex dropped 1.7 percent.

Australia & New Zealand Banking Group Ltd. (ANZ) decreased 2 percent in Sydney after second-half profit missed analyst forecasts. United Overseas Bank Ltd. (UOB) dropped 3.5 percent in Singapore after the bank’s third-quarter net income fell more than analysts had predicted. LG Electronics Inc. (066570) tumbled 11 percent as South Korea’s exchange asked the company to address speculation that the company may sell shares.

S&P 500 futures signal the gauge may snap yesterday’s 1.6 percent advance. Shares rose after Federal Reserve Chairman Ben S. Bernanke said yesterday unemployment is still “far too high” and the Fed may take more steps to boost growth. Figures tomorrow may show non-farm payrolls increased 95,000 in October, less than the 103,000 jobs added the previous month, economists surveyed by Bloomberg News said.
European ‘Hijinks’

Ten-year Treasury futures contracts for December delivery rose 16/32, or $5 per $1,000 face amount, to 130 26/32 in electronic trading at the Chicago Board of Trade. Yields on 10- year notes were little changed at 1.99 percent yesterday.

“We’ve become more bearish on th[You must be registered and logged in to see this link.]e economy because of the hijinks going on in Europe,” said Marc Fovinci, who helps oversee $2.7 billion as head of fixed income at Ferguson Wellman Capital Management Inc. in Portland, Oregon. “We took risk off the table by reducing our equity position and bringing our bond allocations up.”

The cost of protecting Asia-Pacific corporate and sovereign bonds from default increased, with the Markit iTraxx Asia index of 40 investment-grade borrowers outside Japan climbing nine basis points to 207.5 basis points, Royal Bank of Scotland Group Plc prices show. The index is headed for its highest close since Oct. 20, after closing down 0.3 basis points yesterday, according to data provider CMA.

Oil for December delivery sank 1.1 percent to $91.51 a barrel in New York. U.S. crude supplies rose 1.83 million barrels in the week ended Oct. 28, the Energy Department said yesterday, more than the 1 million barrels forecast by analysts in a Bloomberg News survey. Immediate-delivery silver sank 1.3 percent to $33.82 an ounce.