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Weaker Euro Boosts Europe Stocks as Emerging Markets Fall

(Bloomberg) — The weakest euro since 2003 boosted stocks on the third day of the European Central Bank’s quantitative-easing program. Emerging-market shares fell for a ninth day after Chinese economic data trailed analysts’ estimates.

Europe’s shared currency slid 1.1 percent to $ 1.0583 at 7:37 a.m. in New York. Automakers and other exporters led the Stoxx Europe 600 Index 1.3 percent higher. Standard & Poor’s 500 Index futures increased 0.4 percent after the gauge wiped out its 2015 advance on Tuesday. Italy’s 10-year yield declined as much as six basis points to a record-low 1.162 percent.

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ECB President Mario Draghi reiterated on Wednesday the bank’s commitment to push inflation back toward its goal and to support recovery. As the ECB buys debt in its 1.1 trillion-euro ($ 1.2 trillion) program and China cuts borrowing costs to sustain growth, stronger U.S. jobs data has fueled speculation that the Federal Reserve may signal earlier interest-rate increases at its meeting next week.

“The most important thing that QE is doing is giving Europe a fantastically cheap currency,” said David Hussey, head of European equities at Manulife Asset Management in London. “This is shifting growth and demand around the world — Europe is an export-led economic bloc and that’s good news.”

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The euro fell against 14 of its 16 major peers, dropping most versus South Africa’s rand and Singapore’s dollar. The 19-nation shared currency declined 0.8 percent to 128.62 yen. It fell to a five-month low against the krona after data showed the Swedish economy emerged from six months of deflation.

Exporters Climb

The Stoxx 600 rose after losing 1.2 percent in the past two days. All industry groups climbed on Wednesday, with carmakers adding 2.4 percent, the most in a month. BMW AG, which gets more than half its revenue from outside the euro region, increased 3.2 percent, and Daimler AG climbed 2.5 percent. A weaker euro makes European goods more competitive oversees, boosting demand.

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France’s CAC 40 Index and Germany’s DAX Index advanced the most among 18 western-European markets, adding at least 1.7 percent.

Adecco SA rose 4.2 percent after the world’s largest provider of temporary workers posted better-than-expected net income for 2014.

Deutsche Post AG declined 3.1 percent after Europe’s largest postal service reported worse-than-forecast quarterly earnings and said operating profit growth this year may be limited to less than 3 percent. JC Decaux SA lost 4.9 percent as the Decaux family sold shares. Hennes & Mauritz AB dropped 2.5 percent as UBS Group AG recommended selling the stock.

S&P 500 futures expiring this month advanced after the index slumped the most in two months. The U.S. is the worst-performing developed market this year after Greece.

China’s Economy

The MSCI Emerging Markets Index dropped 0.3 percent. A gauge of 20 currencies declined for a 10th day, the longest slump this year.

Chinese stocks trading in Hong Kong fell to the lowest level since December after data showed industrial output posted its weakest start since 2009, and retail sales and fixed-asset investment trailed estimates. Hong Kong’s Hang Seng China Enterprises Index slid for a second day, losing 0.8 percent. The Shanghai Composite Index gained 0.2 percent even as most stocks fell.

China’s industrial output, investment and retail sales growth missed analysts’ estimates in January and February, suggesting more stimulus may be needed. Bloomberg’s gross domestic product tracker, which draws on that data as well as measures such as electricity production, shows economic growth slowing to 6.28 percent in the period, the weakest pace since the start of 2009.

Unexpected Cut

The Thai baht slid 0.7 percent after a surprise cut in interest rates. The Bank of Thailand’s monetary policy committee voted four to three to lower the one-day bond repurchase rate to 1.75 percent. Six economists predicted the decision, while 16 forecast the rate would be held for an eighth meeting, according to a Bloomberg survey.

Russia’s Micex Index rose 1 percent, rebounding from a 3.7 percent decline on Tuesday, the biggest drop in a year. The ruble was little changed after sliding 3.3 percent yesterday.

Ukraine’s $ 2.6 billion of bonds due July 2017 gained for a fifth day, advancing 0.32 cent to 47.04 cents on the dollar, sending the yield down to 49.66 percent. Bonds gained on optimism the International Monetary Fund will sign off on $ 17.5 billion in emergency aid today.

Record Lows

While Italian bonds stayed higher, most euro-area government securities pared gains that sent yields to record lows across the region. France’s 10-year rate dropped below 0.5 percent for the first time on Wednesday. The yield on equivalent German securities was at 0.22 percent after reaching 0.198 percent.

The average yield to maturity on the euro area’s government debt fell to 0.4696 percent on Tuesday, the least since at least 1995, according to Bank of America Merrill Lynch indexes. The average yield on investment-grade corporate bonds in euros dropped 2.5 basis points to a record 0.85 percent, the data show.

Wheat advanced as much as 1.8 percent to $ 5.02 a bushel after the U.S. government made surprise cuts to its outlook for global stockpiles of the grain amid signs of improving demand. Corn rose as much as 1.3 percent.

To contact the reporters on this story: Nick Gentle in Hong Kong at [email protected]; Stephen Kirkland in London at [email protected]

To contact the editors responsible for this story: Stuart Wallace at [email protected]; Stephen Kirkland at [email protected] Stephen Kirkland

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