By Lynn Thomasson and Masaki Kondo - Jan 9, 2012 9:03 AM GMT+0800
Asian stocks (MXAP) fell for a third day, while the euro and oil retreated before German Chancellor Angela Merkel and French President Nicolas Sarkozy meet to develop rescue plans for the euro over the next three months.
The MSCI Asia Pacific Index lost 0.3 percent as of 8:50 a.m. in Hong Kong. Standard & Poor’s 500 Index (SPX) futures declined 0.4 percent. The euro fell to an 11-year low against the yen and weakened to its least in nearly 16 months versus the dollar. The Australian dollar dropped 0.6 percent. Gold slid 0.5 percent to $1,610.20 an ounce, while oil decreased 0.3 percent.
“People are now saying that a recession in Europe, or a double dip, is far more likely than in the U.S.,” said Kara Ordway, a foreign-exchange strategist at City Index Asia Pacific in Sydney.
Germany will sell 4 billion euros ($5.1 billion) of six- month bills today, while France will auction a total of 7.7 billion euros of debt maturing in 364 days or less. China’s December lending and money supply growth exceeded economists’ estimates, signaling monetary conditions may be easing as the nation’s central bank said it must be prepared for possible shocks from the U.S. and Europe.
The meeting between Merkel and Sarkozy will be followed by a round of talks among euro-area leaders before the next summit meeting in Brussels on Jan. 30. Italian Prime Minister Mario Monti also will visit Berlin this week, and Sarkozy and Merkel will both travel to Rome on Jan. 20 for negotiations with the Italian government.
German industrial production (GRIPIMOM) probably dropped 0.5 percent in November after a 0.8 percent increase the previous month, according to the median estimate of economists surveyed by Bloomberg News before the figures are released today.