The dollar weakened to a seven- month low against the yen and Treasuries rose amid speculation the Federal Reserve will unveil more stimulus today. European stocks dropped from a 14-month high as European Aeronautic, Defence & Space Co. and BAE Systems Plc fell on plans to merge.
The dollar depreciated 0.3 percent to 77.63 yen at 8:35 a.m. in New York. The yield on 10-year Treasuries fell three basis points. The yield spread between Dutch and German 10-year debt narrowed to the least since January after an election in the Netherlands. The Stoxx Europe 600 Index lost 0.4 percent as BAE dropped 7.6 percent and EADS sank 8.8 percent. Futures on the Standard & Poor’s 500 Index slipped 0.2 percent. Oil increased 0.3 percent to $97.30 a barrel.
The Fed will probably announce a third series of bond purchases known as quantitative easing, according to almost two- thirds of economists in a Bloomberg survey. A report today showed jobless claims rose more than forecast last week. EADS (EAD), the parent of Airbus SAS, would control 60 percent of the new entity, with London-based BAE owning the rest, the companies said yesterday.
“Markets are slightly nervous in anticipation of quantitative easing,” Lim Say Boon, chief investment officer at DBS Private Bank, said on Bloomberg Television in Singapore. “If we get QE3 then the markets, beyond this period of nervousness, are likely to rally even further.”
The Stoxx 600 retreated from its highest level since July 2011. EADS and BAE Systems dropped as Barclays Plc said that both companies’ shareholders may adjust their positions following yesterday’s announcement of a combination.
CONTINUED at Bloomberg.