US stocks fell after a six-week rally left the Standard & Poor's 500 Index trading at its most- expensive valuation since July 2011. European shares slipped with Spanish and Italian bonds as the region's finance ministers prepared to meet to discuss aid to Cyprus and Greece.
The S&P 500 fell 0.2 per cent to 1,515.55 at 1:48 p.m. in New York after closing last week at its highest level since November 2007 and a price-to-earnings ratio of almost 15. The Stoxx Europe 600 Index dropped 0.6 per cent. Italy's 10-year bond yield rose seven basis points to 4.62 per cent, approaching a two-month high. The yen weakened against all 16 major peers, falling 1.1 per cent versus the euro. Gasoline, copper and soybeans lost more than 1 per cent to lead commodities lower.
European finance chiefs were set to meet in Brussels today as a tightening election contest in Italy and corruption allegations in Spain threaten to reignite the region's debt crisis. Ministers and central bankers from the Group of 20 will gather in Moscow later this week. Haruhiko Kuroda, one of the potential candidates to head the Bank of Japan, said additional monetary easing can be justified this year.
"With the strong start this year, it'd be very understandable if stocks pause here to get a gauge of how growth is going to shape up through the middle part of the year," James McDonald, chief investment strategist at Northern Trust Corp. in Chicago, said in a telephone interview. His firm manages $US759 billion.
Equity trading volume was lower than average, with markets in Japan, China, Hong Kong, South Korea, Taiwan, Vietnam, Singapore and Malaysia closed for public holidays.
The S&P 500 has rallied more than 6 per cent in 2013 as US lawmakers reached a budget compromise and companies reported better-than-estimated earnings. The index closed last week about 3.1 per cent below its record of 1,565.15 reached in 2007.
Eight of 10 S&P 500 industry groups retreated, led by commodity and consumer-discretionary companies. Google Inc. declined 1 per cent as Chairman Eric Schmidt adopted a plan to sell as many as 3.2 million shares in the operator of the world's most popular search engine. Loews Corp. fell 1 per cent after reporting earnings that missed estimates. AOL Inc. jumped 6.1 per cent after analysts recommended investors buy the shares. Trading volume of stocks in the index was 22 per cent less than the 30-day average at this time of day.
About three stocks declined for every two that rose in the Stoxx 600, where trading volume was 29 per cent less than the 30- day average. Novo Nordisk A/S plunged 13 per cent, the most in almost four years, after failing to win US approval for a new insulin. Sanofi, which produces the best-selling Lantus insulin, jumped 3.4 per cent in Paris.
Lundin Petroleum AB tumbled 10 per cent after saying resources in its part of the Johan Sverdrup oil discovery may be toward the low end of previous estimates. Royal Ahold NV advanced 3.8 per cent in Amsterdam after agreeing to sell its 60 per cent stake in ICA, Sweden's largest food retailer, to Hakon Invest AB for 20 billion kronor ($US3.1 billion).
Italy's 10-year bond yield approached an eight-week high of 4.63 per cent set on Feb. 8. The rate on similar-maturity Spanish debt climbed six basis points to 5.43 per cent. US Treasury 10- year yields fell one basis point to 1.94 per cent.
The yen weakened 0.8 per cent to 93.42 per dollar. The euro climbed 0.4 per cent to $US1.3415, snapping a three-day decline.
Some additional easing measures may be justified for 2013, Kuroda said in an interview in Tokyo today, stressing that he was speaking in his capacity as an economist and chief of the ADB, not as a BOJ contender.
The Group of Seven nations are considering releasing a statement on exchange rates this week to calm concern the world is on the brink of a currency war, three officials from G-7 countries said, before the G-20 meeting.
The S&P GSCI gauge slipped 0.2 per cent as 19 of its 24 commodities declined. Natural gas futures declined 0.5 per cent to $US3.255 per million British thermal units amid forecasts for mild weather that would limit consumption of the heating fuel.
Soybeans fell 1.4 per cent after the US Department of Agriculture raised its estimate of world inventories in a report on Feb. 8. Wheat slipped 1.6 per cent and gasoline slumped 1.2 per cent to $US3.0215 a gallon. New York-traded crude oil rallied 1 per cent to $US96.65 a barrel.
The MSCI Emerging Markets Index slipped 0.2 per cent as price swings fell to an all-time low amid Lunar New Year holidays. Turkey's benchmark index slumped 1.8 per cent, while Indonesia's Jakarta Composite Index rose 0.3 per cent to a record. Russia's Micex Index slipped 0.3 per cent while India's Sensex lost 0.1 per cent.
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