Euro weakens as bonds climb on Greek concerns

European bonds retreated and the region’s currency weakened amid concern that Greece will struggle to secure more aid. Chinese stocks led gains in emerging markets after the country’s central bank cut interest rates for the third time in six months.

The yield on 10-year Italian bonds rose seven basis points to 1.74 per cent by in New York, and the euro slid 0.5 per cent to $1.1143. The Stoxx Europe 600 Index and Standard and Poor’s 500 Index futures were little changed.

Airbus Group slumped 4.1 after a military transport aircraft crashed in Spain on Saturday.

Shares in Shanghai climbed the most in two weeks. Natural gas advanced to a six-week high in New York on speculation rising temperatures will boost air-conditioning use.

Euro-area finance ministers are meeting on Monday to discuss aid for Greece as resistance builds to further help and the country has to pay about €750 million to the International Monetary Fund on Tuesday.

China is bolstering stimulus as data signal the world’s second-largest economy may struggle to meet its official growth target of about 7 per cent.

Bonds Fall

Spain’s 10-year bond yield rose six basis points to 1.72 per cent as securities fell across the euro area. German 10-year bund yields increased three basis points to 0.57 per cent. The rate on Treasuries increased two basis points to 2.17 per cent before the nation auctions $64 billion of coupon-bearing debt this week.

The euro weakened for a third day versus the dollar and dropped 0.3 per cent to 1.0397 Swiss francs.

Sterling strengthened against all of its major counterparts on speculation the Bank of England will signal this week that it’s moving closer to raising interest rates after keeping monetary policy unchanged on Monday.

The BOE releases its Inflation Report on Wednesday, which will be the first comment from officials after the election.

Greece’s ASE Index of stocks fell 3 percent, for the biggest decline among western-European markets. The 10-year bond yield increased eight basis points to 10.75 per cent.

Miners and retailers in the Stoxx 600 climbed the most among 19 industry groups. Glencore gained 2.3 per cent. Delhaize , owner of the US Food Lion stores, jumped 15 per cent, and Royal Ahold advanced 6.7 per cent after reports that the companies are in early stages of merger talks. Banca Monte dei Paschi di Siena gained 2.9 per cent as it posted a profit after 11 quarterly losses.

Bloomberg