S&P 500 Futures and Options Trading

S&P 500 Futures: Stocks Climb as Treasuries, Pound Retreat; Dollar Trims Gains

Standard and Poor's 500 Futures and Options

March 10^th, 2010

Stocks rose, erasing losses for the year for a gauge of emerging markets, while Treasuries fell and the dollar trimmed gains as China said exports soared by the most in three years and concern over Greece’s deficit eased. The British pound weakened as U.K. manufacturing contracted.

The MSCI Emerging Markets Index advanced 0.6 percent to the highest level in seven weeks at 9:44 a.m. in New York. The Standard & Poor’s 500 Index gained for the eighth time in nine days, climbing 0.3 percent to 1,144.12. The pound fell against 15 of its 16 major counterparts, while the dollar slumped against 11. The Dollar Index, which gauges the currency against six major trading partners, was little changed after increasing as much as 0.3 percent.

Investor confidence for emerging markets is improving after China’s exports surged 45.7 percent, the biggest jump since February 2007 and beating the 38.3 percent median estimate of 28 economists surveyed by Bloomberg News. Prospects for Europe worsened as an unexpected slump in German exports ended a four- month streak of gains, according to data released today by the Federal Statistics Office in Wiesbaden.

“You’re seeing a significant bounce back, pretty much on trend in emerging Asia, whereas the major economies are still coming from a lower base,” Greg Gibbs, a foreign-exchange strategist at Edinburgh-based Royal Bank of Scotland Group Plc, said in an interview on Bloomberg Television. “Longer-term growth trends are attracting a lot of capital into emerging Asia.”

Emerging Markets

Emerging market gains were paced by a 2.1 percent rally in Ukraine’s PFTS index, the seventh day of gains as Viktor Yanukovych moves toward forming a government after winning last month’s election. Mol Nyrt., Hungary’s largest refiner, jumped 3.5 percent after the company discovered crude oil in the Kurdistan region of northern Iraq.

The Stoxx Europe 600 Index drifted between gains and losses, rising and falling as much as 0.3 percent.

Romania’s Bucharest BET Index gained 0.7 percent as the government revived a planned sale of Eurobonds that were postponed in November when the government collapsed. Turkey’s lira weakened against 15 of 16 major currencies, losing 0.3 percent against the dollar, after the International Monetary Fund said talks with the country on a new loan program are “no longer taking place.”

Metals rose on the improved economic outlook for China, the world’s biggest consumer of copper, nickel and zinc and the only country that had increased demand for gold jewelry last year.

Palladium Jumps

Palladium, used in catalytic converters to reduce vehicle emissions, jumped as much as 1.8 percent to $475.25 an ounce, extending its advance this year to 16 percent. Gold for immediate delivery increased 0.1 percent to $1,122.85 an ounce. Crude oil futures for April delivery retreated 0.2 percent to $81.31 a barrel in New York after gaining as much as 0.6 percent.

The pound extended losses after U.K. factory production unexpectedly fell in January for the first time in five months, dropping 0.9 percent from December, the Office for National Statistics said in London. U.K. Prime Minister Gordon Brown said the economic recovery remains fragile and is in its early stages.

The cost of insuring European government bonds using credit-default swaps tumbled, signaling investors agree with former European Commission President Romano Prodi’s view that the worst of the Greek budget deficit crisis is over. Default swaps tied to Greece fell 9 basis points to 282, down from a record-high 428 basis points on Feb. 4, according to CMA DataVision prices. Contracts on Portugal’s debt dropped 6 basis points to 112, Italy fell 5 basis points to 89 and Spain slipped 7.5 to 91 basis points, CMA prices show.

‘Completely Over’

“For Greece, the problem is completely over,” Prodi, who was also Italian prime minister, said in an interview in Shanghai. Greek Prime Minister George Papandreou said President Barack Obama expressed support for measures being taken to deal with Greece’s financial crisis.

German 10-year bunds were little changed, with the yield at 3.14 percent, and the two-year note yield increased 2 basis points to 1.01 percent. Germany sold about 5 billion euros ($6.8 billion) of 1 percent notes due March 2012 for an average yield of 0.98 percent. The Bundesbank retained 16 percent of the amount on offer, compared with 10 percent at the previous sale of the security.

Greek Bond Spreads

The difference in yield between German bunds and 10-year Greek bonds narrowed 1 basis point to 312 basis points, down from 396 basis points on Jan. 28, the highest since the 1999 start of the euro. The 10-year Treasury yield rose almost 4 basis points to 3.74 percent, before the U.S. sells $21 billion of the notes today, the second of three auctions this week.

The MSCI World Index of 23 developed nations’ stocks were little changed. Fortis rose 3.1 percent in Brussels after the owner of Belgium’s biggest life insurer reported earnings that topped analysts’ estimates.

Inchcape Plc slipped 2 percent in London after saying sales declined. Tullett Prebon Plc surged 24 percent after saying it’s in early takeover talks while rival ICAP Plc, the world’s biggest broker of transactions between banks, rallied 3.4 percent.

The MSCI Asia Pacific Index slipped 0.2 percent. Toyota Motor Corp., the world’s biggest carmaker, retreated 1.4 percent in Tokyo. Telstra Corp., Australia’s largest telephone company, rose 2.8 percent in Sydney amid speculation it will avoid a breakup.

- Gavin Serkin at Bloomberg.