The yield on Italy’s five-year note jumped 65 basis points to 7.52 percent at 8:40 a.m. in New York. The Stoxx Europe 600 Index slid 1.9 percent, reversing a 1 percent gain. Standard & Poor’s 500 Index futures lost 2.5 percent. Asian shares rose as China’s inflation slowed. The euro weakened 1.6 percent to $1.3618 and the Dollar Index climbed 1.3 percent. The yield on 10-year Treasuries sank 10 basis points. Oil fell 1.7 percent.
Italian Prime Minister Silvio Berlusconi agreed to step down after the approval of an austerity plan to tame the euro- region’s second-biggest debt, while LCH Clearnet SA raised the deposit it demands for trading the nation’s securities. Greek Prime Minister George Papandreou’s talks on forming an interim government dragged into a third day as a near-agreement with the biggest opposition party stalled on European demands for written commitments.
“There’s so much uncertainty, who’s going to take over, when are they going to take over, we just don’t know.” Gary Jenkins, the head of fixed income at Evolution Securities Ltd. in London, told Maryam Nemazee on Bloomberg Television’s “The Pulse” today. The market wants “a government in place as soon as possible to get the austerity measures passed. But they might not get what they want.”
The yield on Italy’s 10-year bond rose 57 basis points to 7.33 percent, and the two-year yield increased 71 basis points at 7.09 percent. Credit-default swaps on Italy’s government bonds jumped 38 basis points to a record 562, according to CMA prices.
Fourteen shares fell for every one that gained in the Stoxx 600 and all 19 industry groups retreated. Admiral Group Plc plunged 29 percent, the most since its initial public offering in 2004, as the U.K. car insurer said a period of higher-than- expected personal injury claims would lower reserves. Mediaset SpA, the broadcaster controlled by Berlusconi, fell 8.6 percent.
The drop in S&P 500 futures indicated the U.S. gauge will snap a two-day advance. Adobe Systems Inc. tumbled 9.4 percent in pre-market trading after the largest maker of graphic-design software cut its earnings forecast.
New York oil dropped to $95.14 a barrel, the first decline in six sessions. Zinc slumped for the first day this week, and copper declined for a fourth day, losing 1.3 percent.
The MSCI Emerging Markets Index fell for the first time in four days, losing 0.8 percent. Benchmark gauges in Brazil, Russia, India, Poland, Hungary and South Africa declined more than 1 percent. The Hang Seng China Enterprises Index of mainland companies listed in Hong Kong climbed 2.2 percent.