Euro Gains strength and Copper Falls on Anticipation of Rate Hikes in China and the Euro zone

The euro strengthened while German bonds and copper fell on speculation the European and Chinese central banks are weighing rate increases. Portuguese stocks and bonds rose after a bailout agreement. U.S. futures advanced.

“The euro appreciated 0.3 percent against the dollar at 10:20 a.m. in London. The German two-year note yield rose three basis points, pushing the difference with 10-year bunds to the least since January 2009. Portugal’s two-year yield tumbled 69 basis points. The Shanghai Composite Index plunged 2.3 percent, the biggest drop among equity markets worldwide. Standard & Poor’s 500 Index futures rose 0.1 percent, and the Stoxx Europe 600 Index slipped less than 0.1 percent. Copper fell 1.4 percent and silver futures retreated 1 percent.

Interest-rate futures are signaling European Central Bank President Jean-Claude Trichet will map out more increases in borrowing costs at the end of a policy meeting tomorrow. The People’s Bank of China said in a report yesterday that stabilizing prices and managing inflation expectations are “critical.””

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