European Stocks Fall; British Airways, Anglo American, B&B Drop

By Sarah Jones

July 4 (Bloomberg) -- European stocks fell, capping their fifth straight weekly decline, as oil prices near a record high weighed on airlines and a retreat in metals pushed commodity producers lower. Most Asian stocks fell, while U.S. markets were closed today for Independence Day.

British Airways Plc and Air France-KLM Group declined as crude traded above $145 a barrel. Anglo American Plc led mining shares lower as Goldman Sachs Group Inc. downgraded the industry. Bradford & Bingley Plc tumbled after TPG Inc. dropped plans to inject 179 million pounds ($354.7 million) into the company.

Europe's Dow Jones Stoxx 600 Index slipped 0.5 percent to 281.54 at 9:05 a.m. in London, extending this week's retreat to 2 percent. The fifth consecutive weekly drop is the longest losing streak since January.

``The focus is still very much strongly on the oil price because inflation is mainly driven by the oil price,'' said Bernd Meyer, head of pan-European equity strategy at Deutsche Bank AG in London.

The MSCI Asia Pacific Index was little changed today as the index completed a four-week, 12 percent slide, the longest losing streak since the period ended Feb. 8.

Credit-related losses topping $400 billion, record oil prices and accelerating inflation has led analysts to cut earnings estimates as the outlook for economic growth slows.

Earnings for Stoxx 600 companies will fall 1.7 percent this year, according to data compiled by Bloomberg. That's down from 11 percent growth predicted at the start of 2008.

National Markets

National benchmark indexes fell in 14 of the 17 western European markets that were open. The U.K.'s FTSE 100 lost 0.8 percent. France's CAC 40 slipped 0.7 percent, and Germany's DAX advanced 0.8 percent.

British Airways, Europe's third-largest airline, dropped 3 percent to 202.75 pence. Air France, Europe's biggest airline, retreated 1.4 percent to 14.20 euros.

Crude oil for August delivery was at $145.44 a barrel, up 15 cents, in after-hours electronic trading on the New York Mercantile Exchange.

Futures yesterday climbed to $145.85 a barrel, the highest since trading began in 1983. Prices have risen 3.6 percent this week and more than doubled in the past year.

Anglo American, the world's second-biggest mining company, lost 1.3 percent to 3,227 pence. Vedanta Resources Plc, India's largest zinc producer, declined 2 percent to 1,982 pence. Copper, lead and tin declined in London.

Goldman Sachs downgraded basic-resource shares to ``neutral,'' saying investor concerns about the impact from higher inflation will likely weigh on confidence in the sector.

``We are taking profits in basic resources,'' London-based analyst Peter Oppenheimer wrote in a note to investors. We have a ``view to upgrade again when risks subside.''

Bradford & Bingley

Bradford & Bingley fell 9 percent to 55.5 pence after TPG withdrew its offer to take a stake in the bank.

Britain's largest lender to landlords will continue with the capital-raising announced June 2 through an enlarged rights offer, the bank said. The rights offer is supported by some of the largest shareholders, including Legal & General Group Plc, Standard Life Plc., M&G Investment Managers and Insight Investment Management

Marks & Spencer Group Plc lost 3 percent to 229 pence, dropping for a seventh day. Citigroup Inc. downgraded the U.K.'s biggest clothing retailer to ``sell'' from ``buy'' after the company reported falling sales amid a slump in consumer spending.

The brokerage also cut its 2009 and 2010 pretax profit estimates 17 percent and 29 percent respectively and slashed its price estimate on the stock 54 percent to 205 pence.

``The current sharply deteriorating U.K. macro environment should drive a `Sell' stance on the U.K. general retailers,'' London-based analyst Richard Edwards wrote in a note.

UBS

UBS AG jumped 7.5 percent to 22.6 francs. The European bank hardest hit by the U.S. subprime crisis said it expects to post a second-quarter result ``at or slightly below break-even,'' helped by about 3 billion francs ($2.9 billion) in tax credits and that it sees ``no need to raise new equity.''

UBS, which posted a profit of 5.55 billion Swiss francs ($5.4 billion) a year earlier, said that market turmoil contributed to writedowns and a loss at the investment bank. The bank had a negative flow of net new money, which was worst in April. The results will be published Aug. 12 as planned.

To contact the reporter on this story: Sarah Jones in London at sjones35@bloomberg.net.