Stocks in Europe, Asia Fall, Led by Banks; U.S. Futures Rise

By Sarah Thompson

July 29 (Bloomberg) -- Stocks in Europe and Asia fell on concern credit losses will worsen and the economic slowdown will cut earnings. U.S. index futures advanced as oil prices declined and Amgen Inc. reported earnings that beat analysts' estimates.

UBS AG, the European bank hardest hit by the subprime contagion, and Barclays Plc sank after Merrill Lynch & Co. said it will book more writedowns and sell $8.5 billion of stock. Nomura Holdings Inc. fell in Germany on an unexpected first-quarter loss. Akzo Nobel NV tumbled 11 percent in Amsterdam as the world's biggest paint maker predicted lower earnings after higher costs and a slump in U.S. demand hurt profit.

The MSCI World lost 0.4 percent to 1,339.94 at 1:30 p.m. in London, declining for a fourth day. Oil's retreat helped push futures on the Standard & Poor's 500 Index up 0.4 percent and trim the decline in Europe's Dow Jones Stoxx 600 Index to 0.4 percent from as much as 1.3 percent.

``Life is still very difficult for the financials,'' said Andy Lynch, a London-based fund manager at Schroder Investment Management, which has about $10 billion. ``What's particularly surprising is that Merrill had their second-quarter numbers only a few days ago. It shows there is a complete lack of transparency on how these things are valued.''

About $11 trillion has been erased from global equities in 2008 as more than $460 billion in credit-related losses and accelerating inflation damp the outlook for economic and profit growth.

U.S. stocks fell yesterday and the Dow Jones Industrial Average lost more than 200 points for the second time in three days after the International Monetary Fund said there is no end in sight to the housing slump.

Bear Markets

All of the 23 developed nations in the MSCI World Index except for Canada have experienced bear-market plunges of 20 percent or more since September as credit losses surged and record commodity prices stoked inflation.

Declines today in Europe were limited by gains in mining, oil and technology shares after Vedanta Resources Plc and BP Plc reporter higher earnings and SAP AG raised it revenue forecast.

The MSCI Asia Pacific Index decreased 1.8 percent. Sony Corp. fell in Germany after the world's second-largest consumer- electronics maker cut its profit forecast.

India's Sensitive Index dropped 3.9 percent, the biggest retreat among 87 indexes tracked by Bloomberg worldwide, after the central bank raised interest rates for a third time in two months and cut its growth forecast for this year.

UBS dropped 6.3 percent to 19.13 Swiss francs. Barclays, the U.K.'s third-biggest bank, slipped 7.3 percent to 314 pence. ING Groep NV, the largest Dutch financial-services company, declined 2 percent to 20.135 euros.

$5.7 Billion

Merrill will book $5.7 billion of writedowns in the third quarter. Almost $19 billion of net losses in the past year forced Merrill Chief Executive Officer John Thain to backtrack from assurances that the firm had enough capital to weather the credit crisis.

Temasek Holdings Pte., the Singapore-owned fund that became Merrill's biggest investor by acquiring shares in December, will buy $3.4 billion of the new stock, Merrill said yesterday in a statement. The New York-based company is paying Temasek $2.5 billion to offset losses on its earlier investment.

Merrill added 17 cents to $24.50 in pre-market trading.

Oppenheimer & Co. analyst Meredith Whitney said Merrill's shares are trading closer to ``fair value.''

``We applaud this purging of assets as an attempt to cut its losses and focus on stabilizing its platform and righting the franchise toward growth,'' Whitney wrote in a note to clients today.

Nomura, Toyota

Nomura Holdings dropped 1.2 percent to 1,525 yen in German trading. Japan's largest brokerage posted the loss after setting aside 63.1 billion yen ($586 million) for potential costs related to bond insurers. The net loss was 76.6 billion yen for the three months ended June 30. The median estimate among five analysts surveyed by Bloomberg was for profit of 30 billion yen.

Toyota Motor Corp. sank for a third day, declining 3.3 percent to 4,720 yen in Tokyo. The company cut its forecast for worldwide vehicle sales this year by 350,000 units to 9.5 million, as it sold fewer trucks and sport-utility vehicles.

Sony slipped 4.2 percent to 4,035 yen in Germany. The world's second-largest consumer-electronics maker cut its profit forecast by 17 percent as lower camera prices caused first- quarter earnings to decline more than analysts estimated.

Akzo Nobel sank 12 percent to 37.85 euros. The company said second-quarter net income declined 18 percent to 184 million euros ($290 million) and lowered its full-year target after a U.S. housing slump hurt demand and record oil prices drove up costs. Analysts predicted profit of 242 million euros.

BP, SAP

BP rose 1.2 percent to 525.5 pence. Europe's second-biggest oil company said second-quarter earnings jumped 28 percent as crude surged to a record and natural-gas prices increased. Excluding inventory changes and one-time items, earnings beat analysts' estimates.

Vedanta rallied 4.1 percent to 1,928 pence after India's largest zinc and copper producer said first-quarter profit rose 6.3 percent on record iron ore output.

SAP gained 7.5 percent to 36.51 euros. The world's biggest maker of business-management software said it sees full-year revenue increasing to the top end of the target range between 24 percent and 27 percent.

Wolfson Microelectronics Plc lost 10 percent to 109.5 pence after the U.K. producer of semiconductors used to power mobile phones said second-quarter profit fell 27 percent because of acquisition-related costs.

Klepierre SA slid 8.3 percent to 26.75 euros. The French property company that agreed to buy most of Scandinavia's largest shopping-center owner yesterday may sell some of the malls to raise money for other developments in the region, Chief Executive Officer Michel Clair said in an interview.

British Airways, Iberia

British Airways Plc added 4.3 percent to 244.5 pence. Europe's third-biggest carrier said it's holding talks with Spain's Iberia Lineas Aereas de Espana SA about a merger. Shares in Iberia climbed 4.3 percent to 1.71 euros.

Smiths Group Plc fell 1 percent to 1,035 pence. The world's biggest maker of airport-security scanners was downgraded to ``neutral'' from ``buy'' at Merrill due to a delay in prospective cost saving plans and unit sales.

``We do not expect a breakup in the near term,'' London- based analysts Charles Armitage, Celine Fornaro and Andrew Crispin wrote in a note dated today.

Royal DSM NV advanced 8.6 percent to 38.78 euros. The world's largest maker of vitamins said second-quarter profit quadrupled, beating estimates, after it increased prices for vitamin C.

To contact the reporter on this story: Sarah Thompson in London at sthompson17@bloomberg.net