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Economic data could prompt Fed to delay interest rate increase

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(Bloomberg) — The dollar weakened from a 12-year high against the euro, while U.S. equity-index futures rose as a report showed retail sales unexpectedly fell, bolstering the case for keeping interest rates low. Treasuries advanced with European bonds and metals gained.

The U.S. currency dropped 0.8 percent to $1.0627 per euro at 9:03 a.m. in New York. Standard & Poor’s 500 Index futures added 0.4 percent and the Stoxx Europe 600 Index rose 0.1 percent. Shares in Shanghai climbed to a six-week high, copper advanced for the first time in three days as China’s credit growth exceeded economists’ estimates. The yield on 10-year Treasuries slid four basis points to 2.07 percent and Italy’s 30-year rate tumbled 18 basis points to a record-low 1.79 percent.

Sales at U.S. retailers fell in February for a third consecutive month, while jobless claims decreased more than forecast, reports showed Thursday. Speculation that the Federal Reserve is moving closer to increasing interest rates as counterparts in Europe and Asia ease policy sent the Bloomberg Dollar Spot Index up 3.6 percent in the past six days.

“Certainly, the market is becoming a bit more cautious and there has been a lot of talk these past few days, can the trend continue, are we going to see parity in the next couple of days?” said Thu Lan Nguyen, a strategist at Commerzbank AG in Frankfurt.

The dollar fell against all but one of its 16 major counterparts, weakening 0.3 percent to the yen. The Bloomberg Dollar Spot Index declined 0.7 percent.

Falling sales

Retail sales dropped 0.6 percent following a 0.8 percent decrease in January, Commerce Department figures showed. The median forecast of 86 economists surveyed by Bloomberg called for a 0.3 percent gain.

Initial jobless claims fell 36,000 to a three-week low of 289,000 in the period ended March 7 from a revised 325,000 in the prior week, according to the Labor Department. The median forecast called for 305,000 new applications.

Citigroup Inc. added 3.5 percent in early New York trading after getting Fed approval to pay 5 cents a share in dividends and buy back as much as $7.8 billion of stock during the next five quarters, up from $1.2 billion over the past four.

Morgan Stanley gained 2.7 percent after boosting its payout to 15 cents a share, from 10 cents, and saying it will buy back as much as $3.1 billion of stock.

Intel forecast

Intel Corp. fell 4 percent after cutting its first-quarter revenue outlook. Acadia Pharmaceuticals Inc. tumbled 24 percent in pre-market New York trading after postponing a new drug application and saying its chief executive

Futures on the Dow Jones Industrial Average and on the Nasdaq 100 Index are no longer available for trade on CME Group Inc.’s electronic trading platform.

The Stoxx 600 climbed for a second day after its biggest jump since Jan. 23 on Wednesday. Commodity producers advanced the most.

K+S AG climbed 6.7 percent after saying earnings this year will significantly exceed last year’s figures on higher prices for potash and salt. Deutsche Lufthansa AG rose 2.7 percent after saying operating profit will rise this year, boosted by its main passenger unit, the Austrian subsidiary and its catering business.

Asos Plc rallied 20 percent as the U.K.’s largest online- only fashion retailer reported second-quarter sales that beat analysts’ estimates. Serco Group Plc slid 15 percent after saying it will raise 555 million pounds ($832 million) in an underwritten rights offering at 101 pence.

Emerging markets

The MSCI Emerging Markets Index rose for the first time in 10 days, climbing 0.5 percent. The Shanghai Composite Index advanced 1.8 percent to the highest since Jan. 27. Aggregate financing was 1.35 trillion yuan ($215.5 billion) in February, above the estimate of 1 trillion yuan. New yuan loans totaled 1.02 trillion yuan and M2 money supply rose 12.5 percent. The data suggest monetary easing is spurring demand for loans.

Russia’s ruble strengthened for a second day, advancing 1.4 percent on higher oil. The Micex Index slipped 0.5 percent. The yield on government five-year notes fell 29 basis points to 13.18 percent, the lowest since Feb. 23. The central bank will probably cut its main rate 100 basis points to 14 percent on Friday, according to the median estimate in a Bloomberg survey.

Ukraine’s hryvnia strengthened 2.4 percent while $2.6 billion of bonds due July 2017 fell for the first time six days, slipping 0.76 cent to 46.59 cents on the dollar.

The International Monetary Fund approved a $17.5 billion loan program for Ukraine, including an immediate $5 billion disbursement, to help the former Soviet republic stave off default amid a conflict with pro-Russia rebels.

Gold rebounds

Gold rose as much as 1 percent to $1,166.66 an ounce, according to Bloomberg generic pricing. The metal touched $1,147.72 on Wednesday, the lowest level since Dec. 1. Silver advanced 1 percent and platinum added 0.7 percent.

Copper climbed 2.5 percent on the London Metal Exchange. Aluminum gained 1 percent and nickel increased 1.6 percent. China is the world’s biggest consumer of metals.

West Texas Intermediate crude was 0.6 percent higher at $48.47 a barrel, advancing from the lowest closing price in almost two weeks. Government data showed Wednesday that U.S. crude stockpiles expanded further from a record high, adding to a global surplus. Brent crude gained 1.3 percent to $58.27.

Government bonds rose across the euro area for a fourth day, buoyed by the European Central Bank’s program of sovereign- debt purchases. National central banks purchased 9.8 billion euros ($9.4 billion) of debt in the first three days of the plan, according to policy maker Benoit Coeure. The average maturity of purchases was nine years, Coeure said in Paris on Thursday.

Bonds climb

Spain’s 30-year yield fell 13 basis points to 1.83 percent and the rate on similar-maturity German debt declined four basis points to 0.65 percent.

The average yield to maturity on the euro area’s government debt fell to 0.4252 percent on Wednesday, the lowest since at least 1995, according to Bank of America Merrill Lynch indexes.

The yield on Greece’s 10-year bonds fell 14 basis points to 10.54 percent. ECB Governing Council increased its Emergency Liquidity Assistance for Greek banks by 600 million euros in a meeting by teleconference on Thursday, according to two people familiar with the decision.

New Zealand’s dollar rose 1.6 percent after the central bank kept the official cash rate on hold even as inflation slows to zero.

–With assistance from Adam Haigh in Sydney, Cecile Vannucci, Paul Dobson and James Herron in London and Emma O’Brien in Wellington.