The euro dropped toward a seven-month low, European stocks traded at a three-month high and credit risk fell as a sense of anticipation gripped global markets before the European Central Bank decision on monetary policy.
The shared currency fell the most in two weeks as all but one analyst projected the ECB would cut its deposit rate further below zero. Automakers were among the biggest gainers in stocks as the weaker exchange rate aided exporters, and yields on euro-area government bonds fell to record lows. Brent crude halted a five-day losing streak as the Organization of Petroleum Exporting Countries prepared to meet on Friday. Metals slid and the ruble sank for the seventh day.
As well as cutting rates, ECB President Mario Draghi may also expand asset purchases to revive inflation in the 19-nation currency bloc. It's contemplating more stimulus at a time when the U.S. is moving closer to raising interest rates. Janet Yellen, chair of the Federal Reserve, will speak in front of a Congressional committee on Thursday after saying Wednesday she's confident in the recovery and warning of the risks of waiting too long before liftoff. Data on U.S. initial jobless claims and factory orders are also due.
"The key for markets today is the extent to which Draghi exceeds or disappoints in what they're going to do — they're clearly going to do something," said Daniel Murray, London-based head of research at EFG Asset Management. "A more dovish response would be received more positively by markets. The risk is that they do less rather than more."
Currencies
The euro slumped against all but one of its 16 major peers, sliding most versus the Brazilian real and Australian dollar. The 19-member common currency dropped 0.5 percent to $ 1.0560 at 11:32 a.m. London time, approaching the weakest level since April 14, and slid 0.3 percent to 130.38 yen. It was little changed at 1.081 Swiss francs after sliding 0.9 percent on Wednesday.
"Draghi will struggle to exceed dovish market expectations," said Valentin Marinov, head of Group-of-10 currency strategy at Credit Agricole SA. "We can break towards to lows just below $ 1.05 before the announcement. From there on, it's all about the ECB."
The Bloomberg Dollar Spot Index, a gauge of the greenback against 10 major peers, gained 0.2 percent after climbing the same amount on Wednesday, when Yellen said the U.S. economy is ready for higher borrowing costs.
A report from the ADP Research Institute Wednesday showed U.S. employers added the most workers in five months in November, indicating government payrolls data due later in the week may be stronger than some analysts predict. The odds of a rate increase in December were at 74 percent, based on futures data compiled by Bloomberg.
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Stocks
The Stoxx Europe 600 Index added 0.7 percent. It's been trading around the same level for a week as investors awaited the ECB decision. All of the index's carmakers climbed, with BMW AG set for its highest close since June.
European miners fell for a third day, extending their lowest levels in two months. Anglo American Plc extended its lowest price since at least 1999, while BHP Billiton Ltd. traded near a seven-year low.
Standard & Poor's 500 Index futures expiring this month advanced 0.6 percent. The gauge fell 1.1 percent on Wednesday, dragged lower by tumbling oil prices.
Bonds
German two-year notes yields were among those in the euro area reaching record lows on Thursday, when they dropped to minus 0.449 percent. Austria, Belgium, Finland, France and Spain also saw record-low yields.
Treasuries maintained losses, with yields on debt due in a decade at 2.20 percent following a four basis-point advance last session. Yields on two-year Treasury notes were at 0.94 percent, after the ADP report pushed the rate on the policy-sensitive notes to near its highest level since 2010.
The cost of insuring financial companies' senior credit fell to the lowest since April on a closing basis. The Markit iTraxx Europe Senior Financial Index of credit-default swaps on investment-grade banks and insurers dropped one basis point to 66 basis points. The gauge reached 101 basis points during Greece's economic crisis in July.
The Markit iTraxx Europe Index of credit-default swaps on investment-grade companies fell for a fourth day, declining one basis point to 69 basis points. A gauge of default swaps on junk-rated companies dropped for a seventh day.
Commodities
West Texas Intermediate futures gained 1.5 percent to $ 40.53 a barrel, as Brent climbed 2 percent.
A majority of OPEC members agree on a supply cut, with the exception of Saudi Arabia and Gulf Arab nations, according to the Iranian oil ministry's Shana news agency.
As OPEC's de facto leader, Saudi Arabia may propose an eventual group production cut of 1 million barrels a day that may take effect in 2016, Energy Intelligence reported Thursday, citing a group delegate it didn't identify. A Saudi official, who asked not to be identified because the matter isn't public, called the report "baseless."
Copper retreated 0.9 percent to $ 4,524 a metric ton on the London Metal Exchange, after sinking 1.5 percent in the previous session. Industry data showed expansion slowed in the services sector in China, the world's biggest consumer of industrial metals.
Nickel fell more than 2 percent, while aluminum, zinc, tin and lead slid at least 1 percent. The London Metal Exchange index of six base metals has slumped 26 percent this year and is heading for its worst annual performance since the global financial crisis in 2008.
Iron ore was on the cusp of dropping into the $ 30s a metric ton as the biggest producers expand supply and the onset of winter in China dulls demand. Spot ore with 62 percent content delivered to Qingdao fell 0.9 percent to $ 40.75 a dry ton, a record low in daily prices compiled by Metal Bulletin Ltd. dating back to 2009.
The Bloomberg Commodity Index closed Wednesday at its lowest since 1999.
Emerging Markets
The MSCI Emerging Markets Index fell for a second day, losing 0.4 percent, with all 10 industry groups declining. Equity gauges in Qatar, South Africa, South Korea and the Philippines dropped at least 0.7 percent.
The Hang Seng China Enterprises Index of mainland companies retreated the first time in three days, weakening 0.6 percent. The Shanghai Composite Index jumped 1.4 percent, advancing for a fourth day, as money-market rates dropped and speculation mounted the government will take steps to bolster growth in Asia's largest economy.
Egyptian stocks climbed 2 percent in a third day of gains. Shares rallied 5.5 percent this week, the most for the period since May, after the central bank decided to pay off a backlog of foreign investments trapped in the country because of its dollar shortage.
Russia's ruble extended its longest run of losses since August after oil dropped to the lowest close in more than six years on Wednesday. Indonesia's rupiah fell 0.3 percent amid declines in prices of the nation's key commodity exports such as coal and metals.
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