Markets From Stocks to Debt Show Little Panic About Greece

(Bloomberg) — U.S. stocks fluctuated near record levels, while the euro strengthened and Treasuries fell as investors assessed the chances of Greece ending its showdown with creditors. Oil pared losses while metals tumbled.

The Standard & Poor’s 500 Index rose 0.1 percent at 1:41 p.m. in New York after closing Friday at an all-time high. The Stoxx Europe 600 finished higher by 0.1 percent after dropping as much as 0.7 percent, while the U.K.’s FTSE 100 Index climbed to the highest level since December 1999. The The yield on Greece’s three-year notes rose for a second day to 18.62 percent. Ten-year Treasury yields rose seven basis points to 2.12 percent. The euro gained 0.6 percent to $1.1418. U.S. oil dropped 0.5 percent. Gold sank 1.6 percent to $1,207.80.

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Greece’s government may request an extension of its loan agreement for six months, according to a person familiar with the matter, a step that could ease a standoff with creditors over the country’s future financing. Discussions aimed at finding common ground ended on Monday without breaking an impasse. With no deal, the government could run out of money by March and be forced to choose between breaking election promises or abandoning the euro.

“A lot of the focus continues to be on Europe and Greece,” Joe Bell, a Cincinnati-based senior equity analyst at Schaeffer’s Investment Research Inc., said by phone. “We haven’t seen any sort of resolution on that. That’s hovering in the background for most market participants.”

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Fed Minutes

In the U.S., economic data showed manufacturing in the New York area grew at a slower pace in February. The Federal Reserve Bank of New York’s general economic index fell to 7.78, below economist estimates for a level of 8. Positive readings signal expansion in New York, northern New Jersey and southern Connecticut.

The Federal Reserve releases the minutes from its January meeting on Wednesday. The central bank boosted its assessment of the economy and downplayed low inflation readings in its latest policy statement, even as it acknowledged global risks. Equities sold off sharply following the meeting as the Fed did little to convince investors that it will keep rates near zero past this year.

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Treasury 10-year note yields approached the highest level this year as the haven appeal generated from the turmoil in Greece faded and traders added to bets the Fed will raise interest rates later this year. Treasuries rallied in January as investors sought safety amid Greek turmoil and moves by global central banks to avert deflation.

Energy stocks in the S&P 500 slipped 0.3 percent after earlier losing more than 1 percent. Medtronic Plc rose 3.7 percent after its quarterly profit beat analysts’ estimates.

Record Levels

The S&P 500 rose to an all-time high last week as technology shares rallied and oil rebounded to end stocks’ longest dip since 2013. Signs of easing tension between Greece and European leaders also helped push U.S. equities higher.

The Dow Jones Industrial Average climbed within two points of its all-time closing high on Tuesday.

The route for stocks this year has been uneven — the S&P 500 has rallied 5.1 percent in February, heading for the best monthly performance since October 2011, after losing 3.1 percent in January for its worst month in a year. That evens out to a 1.9 percent gain for 2015, trailing most developed markets.

The Stoxx 600 dropped 0.1 percent on Monday amid the Greek talks after closing on Friday at a seven-year high. The benchmark measure has advanced 9.7 percent in 2015 as the European Central Bank unveiled quantitative easing. German investor confidence climbed to one-year high before the ECB is scheduled to start its bond-buying program next month.

“Investors and analysts seem to be quite complacent and are still expecting a positive outcome,” said Christian Lenk, a fixed-income analyst at DZ Bank AG in Frankfurt. “The market seems to be confident in terms of the two parties finding a solution in upcoming days. What’s interesting is the quite relaxed attitude investors have to the periphery. The domino effect everybody had been fearing is much weaker now.”

Greek Banks

Greek lenders are urging central bank Governor Yannis Stournaras to seek additional emergency cash as deposit outflows accelerate, according to three people familiar with the situation. Deposit withdrawals picked up after bailout talks ended in acrimony Monday night, said the people, who asked not to be identified because the information is private.

Greece’s 10-year yield climbed 59 basis points to 10.24 percent. It reached 44.21 percent in 2012 in the run-up to the biggest debt restructuring in history.

Credit-default swaps insuring $10 million of Greek government debt for five years rose by $200,000 to $4.4 million upfront and $100,000 annually, signaling a 71 percent probability of default, according to CMA.

Portugal’s 10-year bonds rose, sending the yield to 2.36 percent, within seven basis points of a record low set on Feb. 13. Italy’s 10-year yield was little changed at 1.67 percent, while Germany’s rose four basis points to 0.37 percent.

Russia’s Micex Index dropped 0.4 percent, while the dollar-denominated RTS index lost 0.3 percent after falling 1.8 percent on Monday.

Ukraine Fighting

A cease-fire in eastern Ukraine is being ignored in the strategic transport hub of Debaltseve. Pro-Russian separatists are focusing attacks on the rail junction, which links two breakaway regions and where thousands of government troops are holed up, the military said Tuesday. The rebels claimed to have partial control of the city after 120 soldiers surrendered, Russia’s Interfax reported later.

The European Union expanded sanctions on Monday, adding 19 people and nine entities to its blacklist, including Russian Deputy Defense Minister Anatoly Antonov.

Hong Kong’s Hang Seng China Enterprises Index rose 0.5 percent. The Shanghai Composite Index advanced 0.8 percent in the seventh day of gains, the longest rally since Nov. 28. Trading volume was 26 percent below the 30-day average before the holiday that starts on Wednesday.

Gold futures fell to a six-week low approaching $1,200 an ounce on speculation that Chinese demand will fall during the Lunar New Year holiday. Silver tumbled, and platinum dropped to the cheapest in more than five years.

Silver futures for March delivery plunged 5.5 percent to $16.34 an ounce. The price touched $16.265, the lowest since Jan. 9.

Crude fell for the first time in three days in New York amid ample U.S. supplies as the country’s output advances to the highest level in more than three decades.

West Texas Intermediate for March delivery fell to $52.51 a barrel in New York, paring earlier losses of 2 percent. WTI floor trading was suspended Monday for the Presidents’ Day holiday in the U.S., with transactions to be booked Tuesday for settlement purposes.

Wheat for May delivery climbed 1.9 percent. Russian wheat exports ground to a virtual halt last week after the country began taxing shipments in an effort to reduce domestic food prices.

To contact the reporters on this story: Stephen Kirkland in London at; Jeremy Herron in New York at

To contact the editors responsible for this story: Jeff Sutherland at Jeremy Herron, Stephen Kirkland

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