European Stocks Fall With Oil Before Bernanke; Yen Slides

Bloomberg: European stocks fell from an almost five-year high, U.S. equity-index futures rose and oil slid before Federal Reserve Chairman Ben S. Bernanke speaks on the economy. The yen weakened to a three-year low against the euro after the Bank of Japan maintained its easing plan.

The Stoxx Europe 600 Index lost 0.4 percent at 9:55 a.m. in London, after closing at the highest level since June 2008 yesterday. Standard & Poor’s 500 Index futures added 0.2 percent. The yen declined to 133.14 per euro, the weakest level since January 2010, while the pound retreated after U.K. retail sales unexpectedly dropped in April. German bonds were little changed before a 5 billion-euro ($6.5 billion) auction of 10-year debt. Oil slid 0.4 percent and gold rose 0.8 percent.

Bernanke is due to deliver an economic outlook to Congress and the Federal Open Market Committee is scheduled to release minutes of its most recent policy meeting. U.S. existinghome sales probably climbed in April to the highest level in more than three years, economists said before a National Association of Realtors report today. More than $5 trillion has been added to the value of global equities this year on signs of recovery in the U.S. and stimulus measures by central banks worldwide.

“Stocks are retreating but it’s a small pullback in the context of recent euphoric rally,” said Alessandro Bee, an economist at Bank Sarasin & Cie AG in Zurich. “It’s a bit overdone and I’m concerned any disappointment isn’t priced in.”

Stake Sales

The Stoxx 600 fell for the first time in four days. Terna SpA, the operator of Italy’s power grid, William Morrison Supermarkets Plc and Pandora A/S, a Danish jewelry maker, retreated more than 2 percent as investors sold stakes. Metro AG, Germany’s largest retailer, jumped 5.5 percent after Morgan Stanley upgraded the shares.

The gain in S&P 500 (SPX) futures indicated the U.S. gauge will extend a record. A report at 10 a.m. Washington time may show sales of existing U.S. homes climbed in April to the highest level in more than three years. Purchases (ETSLTOTL)rose to a 4.99 million annualized rate last month, the highest since November 2009, from 4.92 million in March, according to the median forecast of 78 economists surveyed by Bloomberg.

The MSCI Emerging Markets Index rose less than 0.1 percent. Benchmark gauges in Russia, Hungary, Turkey, South Koreaand Indonesia gained at least 0.6 percent. The Hang Seng China Enterprises Index of mainland companies listed in Hong Kong fell 0.3 percent, led by an 8.3 percent drop in Huaneng Power International Inc. after Citigroup Inc. cut its recommendation on concern tariffs may fall. Volume on theHang Seng Index was 7.3 percent below the 30-day average after a storm shut the market in the morning.

Widening Deficit

The yen declined versus 14 of its 16 major peers after a government report showed the trade deficit swelled more in April than economists forecast and exports were lower than estimated. It slid 0.4 percent to 102.92 per dollar.

Sterling weakened as much as 0.5 percent to $1.5075, the lowest level since April 4. It was at $1.5083 at 9:36 a.m.

The U.S. currency dropped for a third day against the euro, slipping 0.2 percent to $1.2930. Australia’s dollar tumbled 0.6 percent to 97.46 U.S. cents, approaching an 11-month low, after consumer confidence slumped.

Treasuries fell, pushing the yield on the 10-year note two basis points higher to 1.94 percent.

West Texas Intermediate oil fell for a second day after industry data showed U.S. inventories rose for a fourth week. A government report scheduled for 10:30 a.m. Washington time, is expected to show inventories moved in the opposite direction: a 1 million-barrel decline, according to Bloomberg News survey of analysts.

Gasoline Prices

Gasoline declined for a third day, down 1 percent to $2.8171 a gallon. Prices at the pump have jumped 13.2 cents this month, according to AAA, the largest U.S. motoring organization, as the summer driving season approaches.

Gold rose after falling 1.3 percent yesterday. Copper advanced 1.3 percent after Indonesia ordered Freeport-McMoRan Copper & Gold Inc. to keep its Grasberg mine shut until an investigation is concluded into what caused a tunnel to collapse, killing 28 workers at the complex. Grasberg is the world’s second-biggest copper mine.

reporters on this story: Stephen Kirkland in London