(Bloomberg) -- U.S. index futures fell with the euro after talks between Greece and its creditors broke down. Treasuries rallied while gold held a three-day gain.
Standard & Poor’s 500 Index futures declined 0.5 percent by 11:12 a.m. in Tokyo, signaling the U.S. benchmark may slide from a Feb. 13 record after a holiday yesterday. The MSCI Asia Pacific Index was little changed. The euro was weaker against 15 of 16 major peers. Ten-year Treasury yields dropped three basis points and gold traded at $1,232.27 an ounce. Brent crude added 0.5 percent to $61.70 a barrel. Wheat climbed after Russian shipments tumbled 97 percent due to a new tax.
Discussions in Brussels ended abruptly Monday, with Greece rejecting as “absurd” and “unacceptable” a euro-area proposal to extend the nation’s existing bailout conditions. Failure to strike a deal by Feb. 28, when the current aid expires, risks putting Greece’s euro membership in jeopardy. New home prices fell in 64 of 70 Chinese cities in January, data today showed, underscoring a weakness in demand that was cited by Australia’s central bank as prompting a recent rate cut.
“Markets recognized the discussions were going to be difficult, so I don’t think this changes people’s expectations dramatically,” Angus Gluskie, managing director at White Funds Management in Sydney where he oversees about $550 million, said by phone. “But it is a key point of uncertainty for investment markets, so it’s likely to mean that investors will continue to be cautious.”

Yen Strength

U.S. equity-index futures are signaling losses after rebounding oil prices and better-than-estimated earnings helped send the S&P 500 to a record close of 2,096.99 on Feb. 13. March contracts on the Dow Jones Industrial Average climbed 0.4 percent and those on the Nasdaq 100 Index added 0.2 percent.
About four stocks rose for every three that fell on the Asia-Pacific stock gauge today. Volumes were lower throughout Asia as markets break for Lunar New Year holidays. Hong Kong’s Hang Seng Index added 0.2 percent, with the number of transactions slumping 60 percent from the 30-day average for the time of day.
Japan’s Topix was little changed after its highest close since December 2007 as the yen gained as much as 0.4 percent versus the euro, reaching the strongest level against the common currency since Feb. 9.
The Bank of Japan starts a two-day policy meeting today. Some policy makers oppose increasing the BOJ’s unprecedented stimulus because it could be counterproductive, people familiar with talks said last week. Japan’s benchmark 10-year bond yield has more than doubled to 0.45 percent in less than a month.

Impasse Reached

A weak yen isn’t necessarily bad, Japanese Finance Minister Taro Aso said today in in Tokyo, because it can boost exporters’ profits, which is then reflected in wages. A dollar bought 118.40 yen.
The euro dropped 0.2 percent to $1.1337, falling for a third day versus the greenback. The Greek government accused Eurogroup Chairman Jeroen Dijsselbloem of backtracking on an agreement he made last week with Prime Minister Alexis Tsipras.
The European Union’s commissioner for economic and monetary affairs, Pierre Moscovici, had put forward a draft statement ahead of the meeting that Greece was ready to sign up to, Greek Finance Minister Yanis Varoufakis told reporters after the talks. Dijsselbloem presented finance ministers with a different text that the Greeks could not accept.

Treasuries Rally

Without a deal, Greece could run out of money by the end of March, forcing Tsipras to consider abandoning his promises to the electorate or even leaving the single currency.
Benchmark 10-year U.S. Treasuries yielded 2.02 percent after rates rose in six of the past seven trading sessions. Gold for immediate delivery was little changed after climbing 1.1 percent in the three days through Feb. 16.
Australia’s S&P/ASX 200 Index fell 0.4 percent as Australia & New Zealand Banking Group Ltd. dropped the most intraday since November after reporting an increase in bad debt charges and falling loan margins.
Markets in India, Sri Lanka, Taiwan and Vietnam are closed for holidays Tuesday, with mainland China to shut from Wednesday for the week-long New Year break.
West Texas Intermediate crude was little changed from Friday’s close at $53.03 a barrel. WTI floor trading was suspended Monday for the Presidents’ Day holiday in the U.S., with transactions to be booked Tuesday for settlement purposes.
Crude has rallied the past three weeks as U.S. drillers cut the number of rigs in service to the fewest since August 2011, according to data from Baker Hughes Inc. The slowdown in U.S. drilling is still not sufficient to achieve the slowdown in production growth required to balance the oil market, Goldman Sachs Group Inc. said in an e-mailed report Monday.
One-month ruble forwards were up 0.6 percent at 64.0405 per dollar. Fighting subsided along most of the front line in Ukraine as world leaders urged all sides to adhere to an agreement signed last week in Minsk, Belarus.
While the cease-fire showed signs of holding, the European Union went ahead with plans announced last week to impose restrictions on an additional 19 people and nine organizations in Russia. Russian Deputy Defense Minister Anatoly Antonov was the highest-ranking official to be included on the expanded blacklist.
To contact the reporters on this story: Emma O’Brien in Wellington at eobrien6@bloomberg.net; Nick Gentle in Hong Kong at ngentle2@bloomberg.net
To contact the editors responsible for this story: Emma O’Brien at eobrien6@bloomberg.net; Nick Gentle at ngentle2@bloomberg.net Nick Gentle, Sarah McDonald
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S&P 500 Futures Drop With Euro, Treasuries Rise on Greece