European Stocks Fall, Led by HBOS, RBS; U.S. Index Futures Drop

By Sarah Jones

July 21 (Bloomberg) -- European stocks fell for the first time in four days after HBOS Plc said shareholders agreed to buy only 8.3 percent of its rights offer. U.S. index futures declined, while Asian shares rose.

HBOS, the U.K.'s biggest mortgage lender, dropped the most in a month. Royal Bank of Scotland Group Plc and Societe Generale SA also declined. Roche Holding AG dropped on plans to buy the rest of Genentech Inc. for $43.7 billion.

Europe's Dow Jones Stoxx 600 Index lost 0.7 percent to 278.85 at 8:05 a.m. in London, while futures on the Standard & Poor's 500 Index fell 0.2 percent. The MSCI Asia-Pacific excluding Japn Index increased 3.3 percent.

``The market is difficult,'' said Virginie Robert, a managing director in Paris at Raymond James Asset Management International, which oversees $35 billion worldwide. ``Banks haven't resolved all of their problems.''

Stocks in the U.S. and Europe rallied last week, their first weekly gains since May, after earnings from Citigroup Inc., JPMorgan Chase & Co. and Nokia Oyj beat analysts' estimates and regulators stepped up efforts to buoy the biggest mortgage financiers in the U.S. The steepest weekly drop in oil prices in more than three years buoyed shares of General Motors Corp., Volkswagen AG and Ryanair Holdings Plc.

About $13 trillion has been wiped off the value of global equities since October as financial companies notched up more than $447 billion in credit-related losses. Banks worldwide have raised more than $331 billion to offset losses stemming from the financial market turmoil and slowdown in lending.

Short Sellers

Investors worldwide are betting more than $1 trillion that stock prices will collapse. Managers from William Ackman to Jim Rogers made a total of at least $1.4 billion in July with wagers against U.S. mortgage financiers Fannie Mae and Freddie Mac, according to data compiled by Bloomberg.

HBOS declined 6 percent to 265 pence after shareholders bought 124 million shares at 275 pence apiece, leaving underwriters with unsold shares in the 4 billion-pound ($8 billion) rights offer.

Morgan Stanley and Dresdner Kleinwort Ltd. will seek buyers for the remaining 1.38 billion shares until 4:30 p.m. on July 22, HBOS said.

The Sunday Times said the mortgage lender's offering is expected to be one of the most ``disastrous'' in corporate history, without citing anyone.

Royal Bank of Scotland, Britain's second-largest lender, dropped 1.2 percent to 195.3 pence. Societe Generale of France fell 1.8 percent to 55.75 euros.

Roche, Inmarsat

Roche dropped 2.5 percent to 175.2 francs after Switzerland's largest drugmaker offered to buy the rest of Genentech to gain the largest U.S. maker of cancer medicines. Genentech investors would get $89 a share, 8.8 percent more than the July 18 closing price, Roche said today.

Inmarsat Plc declined 12 percent to 453 pence after the U.K. satellite company that provides communications services said talks with Harbinger Capital Partners about a potential takeover have ended.

The discussions focused on the regulatory process surrounding a possible offer, the company said today in a Regulatory News Service statement. Harbinger didn't make an offer for the company or indicate a potential offer price, and Inmarsat's board ``has therefore concluded that there is no merit in continuing discussions at this time,'' according to the statement.

Wolters Kluwer NV dropped 3.7 percent to 14 euros after Europe's largest tax and legal publisher cut its full-year forecast for sales growth because of market conditions.

The forecast for organic sales growth, which excludes currency swings, acquisitions and disposals, was lowered to 3 percent from 4 percent.

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