European stocks fell for the first time in four days and the euro strengthened after lending data dented speculation that quantitative easing will be increased. Government bonds dropped. The Stoxx Europe 600 Index retreated from a two-month high after the European Central Bank said credit standards on business loans eased for a sixth straight quarter.
The single currency gained as much as 0.5 per cent, while yields on 10-year Italian bonds rose the most in two weeks. Brent fell for a second day, alongside declines for copper and zinc. The Canadian dollar fluctuated after Justin Trudeau’s Liberal Party won a surprise majority in national elections to oust Prime Minister Stephen Harper’s government.
“If the lending environment is on the mend, the chances of further QE drop out of the question,” said Neil Jones, London- based head of hedge-fund sales at Mizuho Bank Ltd. “There was some sense of potential further easing, in part aided by official comment. However, the market is moving away from this thinking.”
The ECB said lending conditions largely improved in the third quarter, spurred by its asset-purchase program and tighter competition among banks. The improvements may weaken the case for an expansion in QE, when policy makers meet in Malta on Thursday, even as a stronger currency and emerging-market slowdown threaten the euro area’s recovery.
Stocks
The Stoxx 600 dropped 0.9 per cent as of 6:31 a.m. in New York, led by declines for miners and energy companies. Standard and Poor’s 500 Index E-mini futures expiring in December declined 0.4 per cent after the stock gauge ended little changed yesterday, at a two-month high. Swatch Group AG fell 2.7 per cent and Cie. Financiere Richemont SA dropped 1.7 per cent after a report showed the biggest quarterly decline in Swiss watch exports since 2009. International Business Machines Corp. tumbled 4.7 per cent in early trading after lowering its full-year profit forecast. SanDisk jumped 8 per cent as people familiar with the matter said the company is in advanced talks to sell itself to Western Digital Corp. Western Digital slipped 3 per cent in Germany. Yum! Brands Inc. climbed 4.7 per cent after people with knowledge of the matter said the company is preparing to separate its battered China business from US operations. United Technologies, Verizon Communications, Chipotle Mexican Grill and Yahoo! Inc. are among 22 SandP 500 companies reporting earnings on Tuesday.
Bloomberg
