Yen Weakens With Oil as Emerging Stocks, Currencies Gain

The yen weakened for the first time in three days against the dollar, while oil declined as U.S. crude stockpiles increased twice as much as forecast. Emerging-market stocks and currencies advanced after a gauge of Chinese services industries climbed to a six-month high.
Japan’s currency slid 0.4 percent to 97.78 per dollar at 9:50 a.m. in London. West Texas Intermediate oil lost 0.4 percent. The MSCI Emerging Markets Index advanced 0.9 percent with the Malaysian ringgit and Indian rupee leading currencies higher. Spanish bonds stayed lower after the nation sold debt. Treasuries dropped and the cost of insuring the debt rose to a five-month high as a partial U.S. government shutdown entered a third day. The Stoxx Europe 600 Index rose less than 0.1 percent. Standard & Poor’s 500 Index futures fell 0.2 percent.
Reports on U.S. jobless claims and services today may get more scrutiny from investors as the shutdown delays many data releases. The first face-to-face talks between President Barack Obama and congressional leaders failed to break the budget impasse yesterday. China’s non-manufacturing index rose to the highest level since March last month, according to the National Bureau of Statistics and Federation of Logistics and Purchasing.
“The fear is that the U.S. economy’s performance will suffer with the government shutdown,” said Adrian Zuercher, a global strategist at Credit Suisse (Hong Kong) Ltd., part of the Swiss bank’s asset-management unit that oversees about $433 billion. “The hard-landing fear in China is fading.”

Services Slow
The Institute for Supply Management’s U.S. non-manufacturing index is projected to fall to 57 for September, from 58.6 in August, according to a Bloomberg survey of economists. Initial claims for jobless benefits probably rose by 10,000 to 315,000 in the week ended Sept. 28, economists said before a Labor Department report due at 8:30 a.m. in Washington.
The yen slid against all of its 16 major counterparts, falling most against Asian peers. The dollar slipped 0.1 percent to $1.3598 per euro after touching $1.3623, the weakest level since Feb. 4.
The yield on 10-year Treasury notes climbed two basis points to 2.64 percent after dropping three basis points yesterday. The rate touched a high for the year of 3.005 percent on Sept. 6. The 10-year average is 3.53 percent.
The cost of insuring against losses on Treasuries rose, with credit-default swaps linked to U.S. government debt increasing 1.5 basis points to 34 basis points, the highest since April 29. That compares with a peak of 56 basis points in July 2011, when a political standoff threatened to shutter programs and delay bond payments.
Debt Protection
The amount of debt protected by default swaps has fallen to $3.4 billion dollars from $5.6 billion two years ago and compares with $13 billion of outstanding insurance on German bunds. There are 886 credit-default swaps contracts linked to U.S debt outstanding, according to the Depository Trust & Clearing Corp. There were 56 trades covering a gross $2.1 billion of Treasuries in the week through Sept. 27, compared with 10 trades the week before.
Spain’s 10-year bond yield climbed four basis points to 4.29 percent. The government sold 1.18 billion euros of 2023 bonds priced to yield 4.269 percent, the lowest since Sept. 10. Italy’s increased one basis point to 4.38 percent.
WTI dropped to $103.68 a barrel. U.S. crude inventories climbed by 5.5 million barrels last week, Energy Information Administration data showed. They were forecast to rise by 2.5 million in a Bloomberg News survey. Nickel, used in stainless steel, advanced 0.6 percent and aluminum rose 0.5 percent. Soybeans jumped 0.5 percent.
China’s Economy
The Hang Seng China Enterprises Index of mainland companies listed in Hong Kong climbed 1.8 percent, the most in three weeks. The non-manufacturing purchasing managers’ index rose to 55.4 in September from 53.9 in August, the report showed. A number more than 50 indicates an expansion. Benchmark equity gauges in Taiwan, India and Thailand added at least 1.5 percent. The ringgit climbed 1.1 percent versus the dollar and the rupee strengthened 0.9 percent.
The Philippine peso strengthened 0.7 percent and the main stock index added 0.4 percent, after falling as much as 0.9 percent. Moody’s Investors Service upgraded the country’s debt rating to investment grade.
The Stoxx 600 rebounded from yesterday’s 0.7 percent slide. The gauge has advanced 0.2 percent since the U.S. government shutdown began on Oct. 1. Trading volume in Stoxx 600-listed companies was 6.7 percent less than the 30-day average today as Germany marked the German Unity Day holiday.
BP Plc rose 1.2 percent after the oil company persuaded an appeals court to order a re-examination of key terms of the 2010 Gulf of Mexico spill settlement. Finmeccanica SpA (FNC), Italy’s largest arms company, climbed 4.6 percent as Banca Akros upgraded the shares. The stock has rallied 16 percent this week, on course for the biggest gain in more than a year.