Exor S.p.A. Investment Conglomorate (EXORF)

[Wildbilly]

EXOR shares rise sharply on Fiat/Chrysler deal

Turkish Lira, South African Rand Tumble -- Update)

By Tommy Stubbington
The Turkish lira sank to a fresh all-time low Thursday, as the first trading day of the new year sparked a renewed selloff in emerging market assets.
The South African rand also tumbled, hitting a 41/2 year low against the dollar, with the repercussions of last month's decision by the U.S. Federal Reserve to scale back its bond-buying stimulus program continuing to echo through financial markets.
Countries such as Turkey and South Africa, which rely on foreign cash to fund their current account deficits, have been hit hard by the coming reduction in the Fed's largess.
Meanwhile, investors have continued to fret about a corruption scandal that has engulfed Turkey's ruling party.
The dollar climbed 1.4% against the Turkish lira to trade at 2.1826 lira, a fresh all-time high. Shares also suffered. Turkey's benchmark BIST 100 stock index fell 1.9%, recouping some of its losses after declining by as much as 2.4% in early morning trading.
But the selloff wasn't limited to Turkey, with analysts pointing to rising yields on U.S. Treasurys as the trigger. The 10-year U.S. Treasury yield, a key indicator of dollar interest rates, climbed above 3% Wednesday.
"The sharp increase in dollar rates puts pressure on countries with current account imbalances, and there's a psychological effect associated with the 3% level," said Aurelija Augulyte, a foreign exchange analyst at Nordea Markets.
The dollar gained 1.3% against the South African rand to trade at 10.629 rand, a 41/2 year high. The Indian rupee wasn't spared, losing 0.7% against the greenback.
Political instability in Turkey has "reminded everyone that some of these emerging market countries are very vulnerable," said Christian Lawrence, and emerging market currency strategist at Rabobank.
Even so, holiday-thinned trade was exaggerating the moves. "The real test will be how trading pans out next week," Mr. Lawrence said.
In wider European markets, stocks fell at the start to the new year, as the slide in Treasurys was echoed in European debt markets, and investors reacted to a slowdown in Chinese manufacturing.
U.K. government bond prices fell to near their lowest level since the summer of 2011. The yield on the U.K. bond, which moves inversely to prices, rose 0.04 percentage points to 3.08%.
The recent rise in yields has given equity investors pause for thought before driving 2013's stock rally any further, according to Jeremy Batstone-Carr, chief economist and strategist at London-based brokerage and wealth manager Charles Stanley, which has around GBP18 billion ($29.8 billion) in assets under management. A further increase could convince some investors to divert cash from stocks into bonds, he said.
"What's slightly worrying is the pace at which we are seeing the yield curve steepen [as longer-dated yields rise]," Mr. Batstone-Carr added.
The pan-European Stoxx Europe 600 index quickly shed opening gains to trade 0.4% lower, having closed at a 51/2 year peak Tuesday. Germany's DAX shed 0.6%, France's CAC 40 lost 1.1%, while London's FTSE 100 slipped 0.6%.
Italy's FTSE MIB fared better, falling just 0.3%. The index was helped by a hefty opening gain for Fiat after the car maker sealed a deal to buy the rest of Chrysler Group LLC. Fiat's largest shareholder, Italian investment company Exor, also saw its stock rise sharply.
Bonds issued by the euro zone's weaker nations bucked the trend, with Italian, Spanish, Portuguese and Greek debt all rallying sharply. Italy's 10-year yield moved below 4% for the first time since May last year.
Data released Thursday showed that the manufacturing purchasing managers index for the euro zone rose to 52.7, in line with an earlier estimate. A reading above 50 indicates expansion of the sector. Earlier, weak Chinese manufacturing data had weighed on most Asian markets.
In the U.S., futures contracts were indicating a 0.2% opening loss for both the Dow Jones Industrial Average and the S&P 500. Changes in futures don't always accurately predict market moves after the opening bell.
In commodities markets, gold leapt 1.5% to $1220.5 an ounce as investors covered bets on lower prices following recent steep declines. Brent Crude climbed 0.3% to $111.12 a barrel.
Write to Tommy Stubbington at [e-mail]

(END) Dow Jones Newswires
January 02, 2014 07:09 ET (12:09 GMT)
Copyright (c) 2014 Dow Jones & Company, Inc.- - 07 09 AM EST 01-02-14
Source: DJ Broad Tape