By Adam Haigh
June 26 (Bloomberg) -- European stocks and U.S. index futures fell on concern credit losses will reduce bank earnings, while slowing economic growth curbs profits for broadcasters and technology companies. Asian shares advanced.
Fortis tumbled 15 percent on plans to raise $2.4 billion of equity and cancel a dividend to boost solvency, while Citigroup Inc. declined after Goldman Sachs Group Inc. recommended selling the shares, predicting $8.9 billion more in writedowns for the bank. Oracle Corp. dropped after its forecast signaled a slowdown in growth. British Sky Broadcasting Group Plc retreated to the lowest in almost four years after JPMorgan Chase & Co. downgraded the stock, citing a ``poor'' economic environment.
Europe's Dow Jones Stoxx 600 Index lost 1.9 percent to 290.44, the lowest since 2005, bringing this year's decline to 20 percent at 2:23 p.m. in London. Futures on the Standard & Poor's 500 Index fell 1.2 percent. The MSCI Asia Pacific Index increased 0.5 percent.
``There is still a lot of nervousness out there,'' said Peter Jarvis, a London-based director of European equities at F&C Asset Management, which has about $200 billion. ``Losses are going to continue. We still haven't seen the hit to earnings downgrades that we would expect.''
The Stoxx 600 has tumbled 9.8 percent this month, headed for the worst June since at least 1987. Record oil prices and rising inflation have stoked speculation central banks will keep borrowing costs high or raise them as credit losses and writedowns approaching $400 billion stifle economic and profit growth.
European Central Bank President Jean-Claude Trichet reiterated yesterday policy makers may raise their key rate from a six-year high next month to curb price increases. The Federal Reserve kept rates unchanged yesterday, after a series of seven reductions, saying ``upside risks'' to prices have increased.
National Markets
National indexes declined in all 18 western European markets. The U.K.'s FTSE 100 slipped 1.5 percent, and France's CAC 40 lost 1.7 percent. Germany's DAX sank 1.8 percent.
Fortis dropped 1.93 euros to 10.72. The company will raise 1.5 billion euros ($2.4 billion) of equity. The measures will increase solvency by 8 billion euros, the company said.
Citigroup lost 4.1 percent to $18.11 in Germany. The bank that's posted the biggest losses from the collapse of the U.S. mortgage market may take an additional $8.9 billion in net writedowns in the second quarter, Goldman said in a report.
The brokerage lowered its recommendation on U.S. investment banks to ``neutral'' from ``attractive,'' and added Citigroup to its ``conviction sell'' list.
``We are hard pressed to find a catalyst that will move the group significantly higher over the next few months as fundamentals continue to deteriorate,'' the brokerage said in a note to clients.
World's Worst
The MSCI World Financials Index has lost 21 percent this year, the worst performance among the 10 industry groups in the index, as banks cut their workforce and sell shares to shore up their balance sheets. Financial firms have raised a total of $314 billion in the past year and have announced plans to trim more than 83,000 jobs since last July, according to figures compiled by Bloomberg.
BSkyB declined 4.9 percent to 470.75 pence. JPMorgan lowered the stock to ``underweight'' from ``overweight'' saying it's at risk from a slowdown in sales and a ``poor'' economic environment, according to a note to clients.
Oracle
Oracle, the biggest software maker, fell 3.9 percent to $21.67 after a forecast of a possible slowdown in growth in the current quarter.
Excluding some costs, profit will be 26 cents to 27 cents a share, the U.S. company said yesterday. Analysts had estimated 27 cents, according to a Bloomberg survey. Sales will rise between 18 percent and 20 percent, which would be the slowest growth since 2006.
Nike Inc., the world's biggest athletic-shoe maker, tumbled 3.9 percent to $63.39 in Germany after reporting a 10 percent drop in U.S. pretax income. Adidas AG, the world's second-largest sporting-goods maker, dropped 3.9 percent to 41.15 euros.
Carrefour SA, the world's second-biggest food retailer, fell 8.8 percent to 37.90 euros, leading a retreat among retail shares in Europe. JPMorgan cut its recommendation to ``neutral'' from ``overweight,'' while Merrill Lynch & Co. lowered its rating to ``neutral'' from ``buy.''
DSG International Plc lost 1.1 percent to 44.5 pence as the largest U.K. consumer-electronics retailer reported its first annual loss since 1994 after writing down the value of its money-losing Italian unit.
Consumer confidence in France declined to a record low in June as the fastest inflation in 12 years eroded households' purchasing power. A gauge of Italian business confidence slumped to the lowest in almost three years this month as orders were curbed by slowing economic growth, rising energy costs and a stronger euro.
The Stoxx Retail Index tumbled 3.5 percent today, its biggest drop in three months and the steepest decline among the 18 groups in the index after banks and automakers.
To contact the reporter on this story: Adam Haigh in London at ahaigh1@bloomberg.net
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