Stocks Decline in Europe and Asia; U.S. Index Futures Advance

By Adam Haigh

June 27 (Bloomberg) -- Stocks fell in Europe and Asia as oil climbed to a record, Carrefour SA cut its profit forecast and analysts said banks may need to raise more capital. U.S. index futures advanced.

Daimler AG and Ryanair Holdings Plc retreated after crude topped $141 a barrel yesterday. Carrefour declined as Europe's biggest retailer said operating profit will increase by less than previously forecast. Barclays Plc slipped after Citigroup Inc. said the bank may have to raise $18 billion. Nokia Oyj slumped as Credit Suisse Group AG downgraded shares of the world's largest mobile-phone maker.

``It could get worse before it gets better,'' Lucy MacDonald, London-based chief investment officer of global equities at RCM Ltd., said in a Bloomberg Television interview. ``There is more concern about growth generally, inflation and no help from interest rates. Weakness is going to be more widespread.''

The MSCI World Index lost 0.5 percent to 1,396.9 at 8:33 a.m. in London as eight of the 10 industry groups retreated. Futures on the Standard & Poor's 500 Index rose 0.2 percent.

Europe's Dow Jones Stoxx 600 Index sank 1.1 percent. The MSCI Asia Pacific Index decreased 1.9 percent, while China's CSI 300 Index tumbled 5.5 percent on speculation the central bank will boost borrowing costs.

U.S. stocks tumbled yesterday, sending the Dow Jones Industrial Average to its worst June since the Great Depression, as rising oil prices, credit-market writedowns and a slowing economy threatened to extend a yearlong profit slump.

Daimler, the world's second-largest maker of luxury cars, slipped 3 percent to 39.87 euros. Bayerische Motoren Werke AG dropped 2.8 percent to 29.69 euros.

Ryanair, Europe's biggest discount airline, slipped 5.2 percent to 2.67 euros.

Record Oil

Oil climbed as much as $2.07, or 1.5 percent, to $141.71, after jumping more than $5 yesterday.

Carrefour dropped 5.4 percent to 35.85 euros as it said operating profit will increase at about the same pace as sales this year, six weeks after saying earnings by that measure would exceed the pace of revenue growth.

Deutsche Bank downgraded the stock to ``hold'' from ``buy.'' Citigroup lowered its price estimate on the shares, while JPMorgan Chase & Co. removed the stock from its ``analyst focus list.''

Barclays slid 4.1 percent to 291.25 pence. Britain's fourth-biggest bank may need to raise a further 9 billion pounds ($18 billion), Citigroup wrote in a note to clients today. The brokerage cut its price estimate to 275 pence from 350 pence.

Deutsche Bank

Deutsche Bank lost 2.7 percent to 56.57 euros as Citigroup said Germany's biggest bank may face ``pressure to raise capital,'' according to a note to clients.

London-based analysts Jeremy Sigee, Kiri Vijayarajah and Stuart MacDonnell, recommended selling call options on the shares because the stock is likely to dip in the next three months as pressure grows on the bank to raise funds.

HBOS Plc dropped 3.5 percent to 266 pence. National Australia Bank Ltd., the nation's largest bank, might bid for the Australian unit of the U.K's biggest mortgage lender, said two people with knowledge of the matter. HBOS is currently seeking 4 billion pounds in a rights offering to replenish capital depleted by writedowns on assets related to the subprime-mortgage crisis and rising loan delinquencies.

Nokia slipped 2.5 percent to 15.71 euros after Credit Suisse cut its recommendation on shares to ``neutral'' from ``outperform'' and removed the stock from its ``focus list.'' The brokerage slashed its price estimate on the stock 38 percent to 18.5 euros.

Nestle SA declined 1.1 percent to 461.25 francs. Societe Generale SA cut its recommendation on shares of the world's largest foodmaker to ``sell'' from ``buy,'' saying the market has not priced in ``weak'' earnings-per-share growth.

InBev NV, the Belgian brewer trying to take over Anheuser- Busch Cos., lost 1.8 percent to 44.21 euros after the U.S. maker of Budweiser beer rejected its $46.3 billion takeover offer.

To contact the reporter on this story: Adam Haigh in London at ahaigh1@bloomberg.net
Last Updated: June 27, 2008 03:43 EDT