European Stock-Index Futures Retreat; BMW, HSBC Shares May Fall

By Michael Patterson

Aug. 1 (Bloomberg) -- European stock-index futures fell, following declines in the U.S. and Asia, as Bayerische Motoren Werke AG dropped its profit forecast and concern deepened that bad loans will erode banks' earnings.

BMW, the world's largest maker of luxury cars, may retreat after saying its business ``deteriorated sharply over the past weeks.'' HSBC Holdings Plc and UBS AG might decline on former Federal Reserve Chairman Alan Greenspan's warning that U.S. home prices are ``nowhere near the bottom.'' British Airways Plc may slide after profit trailed analysts' estimates.

Futures on the Dow Jones Euro Stoxx 50 Index, a benchmark for the euro region, slipped 27, or 0.8 percent, to 3,352 at 7:39 a.m. in London. The U.K.'s FTSE 100 Index may decrease 35 to 5,377, according to CMC Markets, a betting firm.

``Many companies are going to suffer big setbacks in sales,'' Roger Nightingale, global strategist at Pointon York Ltd. in London, which manages about $1.5 billion, said in an interview on Bloomberg Television. ``Companies like BMW that depend on high volumes of sales are very vulnerable to put it mildly.''

Europe's Stoxx 600 capped its third straight monthly drop yesterday as reports showed the U.S. economy expanded at a slower-than-estimated pace and earnings at Unilever trailed analysts' projections. The benchmark for European equities has tumbled 22 percent this year as asset writedowns and credit losses at banks topped $480 billion worldwide.

U.S. Payrolls

Investors might get further clues on the outlook for growth in the world's largest economy today from the U.S. Labor Department's monthly jobs report. Payrolls probably fell by 75,000 in July as the unemployment rate climbed to 5.6 percent, according to the median estimate of economists surveyed by Bloomberg News.

U.S. stocks sank yesterday, sending the Standard & Poor's 500 Index to a 1.3 percent drop, after the Commerce Department said the economy grew at a 1.9 percent rate last quarter and contracted at the end of 2007. The S&P 500 extended its retreat after Greenspan told CNBC that financial market turmoil isn't showing signs of ending.

Asian stocks retreated today after commodity producers slumped and bad loans dragged down profit at Sumitomo Mitsui Financial Group Inc., Japan's second-largest bank by value.

BMW may retreat after saying rising commodity prices, a weak dollar and the slowing U.S. economy ``have made business conditions significantly more difficult.'' The company said net income fell to 507 million euros ($790 million) in the second quarter from 753 million euros a year earlier. Sales declined to 14.6 billion euros from 14.7 billion euros.

`Dismal Earnings'

``BMW's dismal earnings has investors wincing and Europe looks set for an even softer open than earlier predicted,'' said Oliver Stevens, head of dealing at IG Markets in Melbourne.

HSBC American depositary receipts closed 0.8 percent lower than the stock's finish in London. U.S.-traded securities of UBS, the European bank hit hardest by U.S. subprime contagion, ended 0.6 percent below the Zurich close.

While the odds of a recession are 50-50, achieving stable markets will ``take a while,'' Greenspan said in a CNBC interview yesterday.

British Airways Plc might decline. The carrier that's planning a merger with Spain's Iberia Lineas Aereas de Espana SA said first-quarter profit fell to 27 million pounds ($54 million), below the 35 million pounds estimated by analysts.

Profits at Stoxx 600 companies may drop 2.6 percent on average in 2008, according to estimates tracked by Bloomberg. That's down from a forecast for 11 percent growth at the start of the year.

Linde, Ahold

Linde Group may advance. The world's second-largest maker of industrial gases reported profit that beat estimates for a fifth straight quarter, boosted by orders for air separation plants in Abu Dhabi and demand for health-care gases.

Royal Ahold NV might be active. The Dutch owner of U.S. Stop & Shop supermarkets said sales fell to 5.78 billion euros from a restated 5.83 billion euros a year earlier. That exceeded the 5.63 billion-euro median estimate of 12 analysts surveyed by Bloomberg News.

Electricite de France SA, Europe's biggest power generator, said profit declined 12 percent in the first half after last year's earnings were boosted by accounting gains from power distribution assets.

CNP Assurances SA may move. France's largest life insurer said first-half profit was ``stable'' amid falling equity markets and that it's sticking to a full-year target for ``current income'' to rise by at least 10 percent. CNP had a negative adjustment of 180 million euros in the period linked to a drop in its equity trading portfolio, the company said.

To contact the reporter on this story: Michael Patterson in London at mpatterson10@bloomberg.net.