Most European Stocks Fall, Led by Allianz; U.S. Futures Drop

By Sarah Thompson

Aug. 7 (Bloomberg) -- Most European stocks fell after a report showed U.S. jobless claims climbed last week to the highest level in six years, while Allianz SE's earnings were less than analysts' estimated. U.S. index futures and Asian shares declined.

Allianz retreated after Europe's biggest insurer said second-quarter profit tumbled 29 percent. American International Group Inc., the world's largest insurer, dropped after reporting a $5.36 billion loss. British Airways Plc, Europe's third- biggest airline, and Next Plc, the U.K.'s second-largest clothes retailer, fell as oil rose more than $2 a barrel.

Energy stocks advanced, leaving the Dow Jones Stoxx 600 Index little changed, adding less than 0.1 percent to 287.75 as of 1:39 p.m. in London. About 12 stocks fell for every 11 that rose. Futures on the Standard & Poor's 500 Index fell 0.4 percent, while the MSCI Asia Pacific Index slumped 0.8 percent.

The Stoxx 600 dropped after the U.S. government said initial jobless claims increased by 7,000 to 455,000 in the week ended Aug. 2, the most since March 2002. The number of continuing claims climbed to a four-year high.

Shares were earlier little changed after the Bank of England and European Central Bank kept their benchmark interest rates on hold.

ECB President Jean-Claude Trichet said the bank remains focused on bringing down inflation even as economic growth slows. Inflation is ``likely to remain well above levels consistent with price stability for a protracted period of time,'' Trichet said after today's decision.

Dexia SA, the world's largest lender to local governments, tumbled on plans to add $300 million to its U.S. bond insurance unit after the division posted a second-quarter loss.

Bear Markets

All 23 countries in the MSCI World Index except Canada have entered bear markets since September as accelerating inflation pressures central banks to raise borrowing costs, while credit losses nearing $500 billion worldwide and record oil prices threaten economic growth. Freddie Mac, Taylor Wimpey Plc and Babcock & Brown Capital Ltd. have led declines this year.

National indexes decreased in 12 of the 18 western European markets. The U.K.'s FTSE 100 added less than 0.1 percent as did Germany's DAX. France's CAC 40 rose 0.5 percent.

British Airways lost 4.7 percent to 255.5 pence. Air France-KLM Group, Europe's biggest airline, dropped 4.1 percent to 17.53 euros.

Next declined 3 percent to 1,021 pence. J Sainsbury Plc, the U.K.'s third-biggest supermarket company, slid 3 percent to 340.75 pence.

Crude oil for September delivery rose $2.81, or 2.4 percent, to $121.47 on the New York Mercantile Exchange. Yesterday, oil fell to $118.58 a barrel, the lowest close since May 2.

BP Plc, Europe's second-biggest oil company, added 2.9 percent to 536 pence. Total SA, the region's third-largest oil company, increased 1.6 percent to 48.82 euros.

Allianz, Dexia

Allianz slid 1.4 percent to 111.45 euros. Europe's biggest insurer abandoned its earnings growth forecast after losses at Dresdner Bank led to a 29 percent drop in second-quarter profit.

Allianz expects markets to remain difficult through 2009 and its target for 10 percent compound annual growth in operating earnings ``cannot be maintained,'' the Munich-based insurer said.

Dexia sank 9 percent to 9.12 euros on plans to add $300 million to its U.S. bond insurance unit after the division posted a second-quarter loss.

The capital will allow the unit, Financial Security Assurance Inc., to exceed requirements for a AAA credit rating, New York-based FSA said.

AIG, the world's biggest insurer, reported a worse-than- estimated loss after housing-related writedowns wiped out profit for a third straight quarter, renewing concern that the company may need more capital.

AIG lost 8 percent to $26.70 in Germany.

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