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Index Futures Slip as Euro Swings on Greece; Ruble Falls

U.S. and European equity-index futures slid
while the euro swung between gains and losses after Greek voters
handed victory to a party that’s pledged to renegotiate the
terms of an international bailout. Crude oil and industrial
metals dropped with Russia’s

ruble.
Standard Poor’s 500 Index futures sank 0.4 percent by
7:48 a.m. in London and contracts on the Euro Stoxx 50 Index
dropped 0.7 percent. The 19-nation euro added 0.1 percent after
weakening to as low as $1.1098, the least since September 2003.
U.S. crude declined 1.7 percent and nickel slid 2.1 percent in
London. Russia’s ruble tumbled 2.4 percent. China’s yuan headed
for its biggest two-day drop since 2008 versus the dollar.
Greece’s Syriza won a more decisive victory than polls
predicted, coming within two seats of an absolute majority with
most votes counted. The success of Syriza, which pledged to
secure a writedown of the nation’s debt and end austerity
measures, is spurring concern that opponents of the European
Union’s efforts to impose fiscal discipline elsewhere may also
win power. Germany’s Ifo Business Expectations survey is due,
while fighting in Ukraine spread to the port city of Mariupol.
“Nervous moves around currencies are to be expected,”
said Miyuki Ohgami, Senior Strategist at Mizuho Securities Co.
in Tokyo. “The fact that anti-austerity forces had such a big
win suggests negotiations will be drawn out, and stocks were
sold on this. But I think the market is getting calmer in its
assessment of the situation and the negative effects won’t
spread to the entire European region.”
Exit Risk
Tsipras, 40, has pledged to keep the nation within the
single currency area as he negotiates a writedown of Greek debt
and eases budget constraints that were imposed in return for aid
after the country’s economic collapse. The current round of
funding expires on Feb. 28 and talks with the so-called troika –
– the International Monetary Fund, the European Commission and
the European Central Bank — for its renewal have stalled since
September amid demands for further belt tightening.
Germany’s Finance Ministry said in a statement that Finance
Minister Wolfgang Schaeuble’s position was unchanged after the
election result and “the agreements reached with Greece remain
valid.” Finance ministers from the euro area are due to discuss
Greece and its bailout in Brussels on Monday.
The euro retreated 7.4 percent versus the dollar this year
through Friday, the biggest decline among 16 major currencies
tracked by Bloomberg. The ECB last week pledged to pump 1.1
trillion euros ($1.2 trillion) into the region’s economy to
stave off deflation and ignite growth.
Euro-Yen
The euro sank as much as 1.4 percent to a more-than 16-month low of 130.15 yen today. Japan’s currency slipped 0.3
percent to 118.11 per dollar, after gaining 0.6 percent on
Friday. Exports from Asia’s second-largest economy grew more
than economists expected in December, data today showed.
The joint currency’s slide is putting pressure on China’s
yuan, which today rose through 7 per euro for the first time
since 2001. Europe as a bloc is the biggest trading partner for
the world’s second-largest economy, where exports made up 26
percent of gross domestic product at the end of 2013, according
to the World Bank.
The yuan’s two-day drop of as much as 0.8 percent pushed it
to a record 1.89 percent discount to the central bank’s
reference rate. It sank as low as 6.2569 per dollar as the
People’s Bank of China cut its daily fixing by 0.07 percent to
6.1384 a dollar, the lowest since Dec. 4. The spot rate rate is
allowed to diverge a maximum 2 percent from the fixing.
Mariupol Attack
Russia’s currency slid to 65.85 per dollar and 2.4 percent
to 73.825 to the euro. The U.S. and the EU warned Russia may
face further repercussions after a rocket attack on the
Ukrainian port city of Mariupol on Saturday. The projectiles
were launched from rebel-held territory, the U.S., NATO, and the
Organization for Security and Cooperation in Europe said. The
separatists blamed government forces.
Futures on the Dow Jones Industrial Average plunged 0.5
percent and those on the Nasdaq 100 Index fell 0.3 percent. The
SP 500 lost 0.6 percent on Friday in New York, paring a weekly
gain to 1.6 percent.
Copper dropped as much as 3.2 percent to $5,345 a ton in
London, trading near the lowest since July 2009. Nickel lost as
much as 2.3 percent. The Bloomberg Commodity Index slid 1
percent.
West Texas Intermediate crude fell to $44.78 a barrel after
settling Jan. 23 at its lowest price since March 2009. Crude
stockpiles in the U.S., the world’s biggest oil consumer, rose
7.4 percent from last year to end December at 383.5 million
barrels, the American Petroleum Institute said in a monthly
report.
U.S. oil erased gains spurred by the death of King Abdullah
of Saudi Arabia on Jan. 23 after his successor said policies
won’t change in the world’s largest crude exporting nation.
Brent crude was down 1.7 percent to $47.94 per barrel.
To contact the reporters on this story:
Nick Gentle in Hong Kong at
[email protected];
Yuko Takeo in Tokyo at
[email protected]
To contact the editors responsible for this story:
Nick Gentle at
[email protected]
Emma O’Brien


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