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By Bloomberg

European stocks fell and Greek bonds tumbled after the European Central Bank restricted direct access to funding lines for the country’s lenders. Standard & Poor’s 500 Index futures signaled the gauge will extend this week’s gain.

The Stoxx Europe 600 Index slipped 0.4 percent 6:18 a.m. in New York. Greek 10-year yields jumped 62 basis points to 10.30 percent, Spain’s yield climbed three basis points to 1.46 percent and Italy’s rose to 1.57 percent. One-month realized volatility on the euro against the dollar climbed for the 15th successive day and a measure of bank risk reached the highest since December 2013. National Bank of Greece SA and Piraeus Bank SA slumped more than 11 percent. Standard & Poor’s 500 Index futures climbed 0.5 percent. Ukraine’s currency tumbled 32 percent as the central bank loosened management of the hryvnia.

The ECB said on Wednesday it will no longer accept junk- rated collateral from Greece, citing doubt over the new government’s commitment to previous reform pledges. The decision will force the country’s lenders to seek more-expensive emergency funding from their own central bank. In the U.S., a Labor Department report will probably show initial jobless claims rose in the last week of January, according to a Bloomberg survey of economists.

“From where we were six months ago when Greek yields were getting lower and lower and the market was prepared to fund Greece at 5 to 6 percent, now clearly it’s a dramatic change,” Stephen Cohen, chief investment strategist for international fixed income at BlackRock Inc., the world’s biggest money manager, with more than $4 trillion of assets under management, said in an interview on Bloomberg Television’s “On The Move” with Jonathan Ferro. “The key thing is what is the contagion outside of Greece? In the last couple of weeks what you’ve seen really is that it has been fairly muted. The big game changer is the ECB.”

ECB Stimulus

ECB President Mario Draghi unveiled a 1.14 trillion-euro ($1.3 trillion) bond-buying program last month, helping spur a rally in bonds and the best start to a year since 1989 for European stocks.

Greek three-year note yields surged 211 basis points, or 2.11 percentage points, to 18.43 percent. They reached 20.05 percent on Feb. 3, the highest since Greece restructured its debts in 2012. The ASE index of stocks slid 6.1 percent.

The cost of insuring against losses on Greek sovereign debt jumped and credit-default swaps now signal there’s a 69 percent chance the nation will default within the next five years. Contracts on $10 million of the country’s bonds now cost $4.2 million in advance and $100,000 annually, according to CMA. That compares with $4 million upfront yesterday.

Bank Risk

Predictions for the Euribor-OIS spread in June, based on swaps and futures markets, or so-called FRA/OIS spreads, rose 0.7 basis points to 16.1 basis points. That’s the widest since December 2013 for the measure of bank risk.

BT Group Plc added 4.2 percent after agreeing to buy British mobile carrier EE Ltd. for 12.5 billion pounds ($19 billion) from Orange SA and Deutsche Telekom AG. Sanofi advanced 2.5 percent after France’s biggest drugmaker said profit will be “stable to slightly growing” this year. Daimler AG added 1.6 percent after reporting an increase in quarterly profit that beat analysts’ estimates.

BNP Paribas SA lost 3.7 percent as France’s largest bank said new rules and higher taxes will weigh on earnings, even as it posted a jump in quarterly profit. AstraZeneca Plc fell 2.4 percent after reporting fourth-quarter earnings and sales that missed analysts’ projections.

U.S. Earnings

Philip Morris International Inc. and News Corp. are among 28 S&P 500 companies reporting earnings on Thursday. About 78 percent of the gauge’s companies that posted earnings this season beaten analyst estimates, while 55 percent topped sales projections, data compiled by Bloomberg show.

The MSCI Emerging Markets Index fell for the first time in four days, losing 0.4 percent. Benchmark gauges in Poland and the Czech Republic slid 0.6 percent. Russia’s Micex slipped 0.2 percent.

The Shanghai Composite Index retreated 1.2 percent, after rallying as much as 2.4 percent. Hong Kong’s Hang Seng China Enterprises Index added 0.2 percent. The People’s Bank of China said Wednesday it’s lowering the reserve ratio by 50 basis points.

Indonesia Falters

Indonesia’s JCI Index dropped 0.7 percent. Southeast Asia’s biggest economy shrank 2.06 percent last quarter from the previous three months, when it expanded a revised 3.16 percent, the statistics bureau said in Jakarta on Thursday.

Euro price swings versus the dollar climbed to 12.45 percent, the highest since December 2011, one-month historical volatility showed. Bets on future gyrations in the currency pair surged as much as 1.8 percentage points to 13.2 percent, approaching the Jan. 16 high of 14.1 percent, also a level unseen since December 2011, one-month implied volatility data showed.

The 19-nation shared currency rose 0.2 percent to $1.1370. The dollar was little changed at 117.30 yen.

Treasuries declined, pushing the 10-year note yield two basis points higher to 1.77 percent.

Oil in New York rose 1.4 percent, after tumbling 8.7 percent on Wednesday. Brent crude increased 0.4 percent to $54.37 a barrel in London today. Copper in London fell 2.1 percent, retreating from a two-week high, while nickel fell for a third day in the longest losing streak in three weeks.