European Stocks Erase Gain, U.S. Futures Fall on CPI, Jobs Data

By Michael Patterson

Aug. 14 (Bloomberg) -- European stocks erased their gains and U.S. index futures fell as American consumer prices rose more than forecast in July and jobless claims were higher than projected. Asian shares also declined.

Caterpillar Inc. and Royal Bank of Scotland Group Plc dropped after the Labor Department said the consumer price index climbed 0.8 percent, twice as much as anticipated. Daimler AG slipped after the number of first-time applications for unemployment benefits fell to 450,000 from a revised 460,000 the prior week that was higher than previously estimated.

Europe's Dow Jones Stoxx 600 Index lost 0.1 percent to 284.11 at 1:38 p.m. in London, after earlier rising as much as 1.1 percent. Futures on the Standard & Poor's 500 Index slipped 0.5 percent, while the MSCI Asia Pacific Index declined 0.5 percent as real-estate stocks declined.

Stocks climbed earlier in Europe and the U.S. as the cheapest mining shares in six months lured investors and better- than-estimated earnings from Wal-Mart Stores Inc. boosted retailers.

Europe's economy contracted in the second quarter for the first time since the launch of the euro almost a decade ago as faltering sales undermined investment by companies and soaring costs eroded consumer spending power.

Gross domestic product fell 0.2 percent from the first quarter, when it rose 0.7 percent, the European Union statistics office in Luxembourg said. Separate figures showed inflation held at 4 percent in July, less than initially estimated.

More than $12 trillion has been erased from global equity markets this year as credit-related losses at banks including UBS AG and HSBC Holdings Plc topped $500 billion and accelerating inflation threatened economic growth and prompted analysts to cut profit outlooks. The MSCI World Index, a benchmark for equities in 23 developed nations, dropped 15 percent this year.

Earnings for companies in the Stoxx 600 will slide 2.5 percent in 2008, according to analysts' estimates compiled by Bloomberg. That's down from 11 percent growth forecast at the start of the year.

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