Stocks Decline in Europe, Asia; U.S. Index Futures Retreat

By Adria Cimino

Aug. 12 (Bloomberg) -- Stocks fell in Europe and Asia as a bear market in commodities dragged down mining shares and investors speculated the economic slowdown will cut earnings. U.S. index futures retreated after JPMorgan Chase & Co. said it will write down mortgage-backed assets by at least $1.5 billion.

BHP Billiton Ltd., the world's largest mining company, dropped for a third day as gold, platinum and silver slumped. Standard Chartered Plc slipped after Citigroup Inc. recommended selling the stock, saying inflation will hurt profit growth. JPMorgan slid in German trading. Singapore Telecommunications Ltd. sank after profit missed estimates.

The MSCI World Index lost 0.5 percent to 1,362.69 at 9:54 a.m. in London as all 10 industry groups decreased. More than $12 trillion has been erased from global equity markets this year as banks' writedowns and credit-related losses approach $500 billion, threatening economic and profit growth.

``We're waiting for more visibility on the evolution of the economy,'' said Clemence Bounaix, an analyst at Richelieu Finance in Paris, which oversees $6.2 billion. ``There are worries about inflation and consumer spending.''

Reports today showed U.K. house prices fell in July as the squeeze on credit brought the property market to a ``virtual standstill,'' while inflation in France held at the fastest pace in at least 12 years.

Rising credit losses and accelerating inflation have prompted analysts to slash profit estimates. Earnings will slide 2.5 percent in 2008 for companies in the Stoxx 600, according to analysts' estimates compiled by Bloomberg. That's down from 11 percent growth forecast at the start of the year.

Europe, Asia

Futures on the Standard & Poor's 500 Index fell 0.3 percent today. Europe's Dow Jones Stoxx 600 Index declined 0.4 percent, while the MSCI Asia Pacific Index decreased 0.7 percent.

Stocks pared losses as oil fell for a third day, slipping as much as $1.93 a barrel, or 1.7 percent, to $112.52 on the New York Mercantile Exchange.

Europe's Stoxx 600 has rebounded 9 percent from a three- year low on July 15 as oil retreated from a record and companies from Volkswagen AG and Nokia Oyj to Societe Generale SA and Royal Bank of Scotland Group Plc reported earnings that beat analysts' estimates. The gains have trimmed this year's retreat to 20 percent.

BHP, the world's biggest mining company, sank 1.6 percent to 1,465 pence. Anglo American Plc, the world's fourth-biggest diversified mining company, retreated 2.5 percent to 2,611 pence.

Seven-Month Low

Gold, platinum and silver plunged to their lowest in more than seven months on concern a spreading global economic slowdown will reduce demand for raw materials.

The Stoxx 600 Basic Resources Indes 1.9 percent, the most among the 18 industry groups in the Stoxx 600. The industry, last year's best performer, has tumbled 11 percent this month as metals prices retreated.

JPMorgan, the third-biggest U.S. bank, lost 18 cents to $41.71 in Germany. The bank will write down the value of mortgage-backed assets by at least $1.5 billion this quarter after credit-market turmoil and the U.S. housing slump deepened.

Trading conditions ``have substantially deteriorated'' since July and ``sharply widened'' spreads on mortgage-backed securities and loans caused losses, the second-biggest U.S. bank by market value said.

``From the beginning, we said it was a very significant crisis and would take time to work though the system,'' said Lucy MacDonald, London-based chief investment officer of global equities at RCM Ltd., which has $100 billion under management.

Standard Chartered

Standard Chartered slipped 4.4 percent to 1,529 pence. Citigroup cut its recommendation on the stock to ``sell'' from ``hold,'' citing rising inflationary pressure in Asia.

``This will act as a cap on the group's rating with earnings potentially disappointing as asset growth slows next year,'' the analysts wrote.

SingTel slumped 3.1 percent to S$3.47, set for its biggest decline since June 16. First-quarter profit fell 5.3 percent to S$878.1 million ($622 million) as a stronger currency eroded overseas earnings. Profit, the lowest in two years, missed the S$902 million median of analyst estimates in a Bloomberg survey.

Henkel AG & Co. KGaA lost 1.3 percent to 27.44 euros as Goldman Sachs Group Inc. downgraded shares of the German maker of Persil detergent to ``sell'' from ``neutral.''

Full-year 2008 earnings guidance ``looks vulnerable in light of material input price pressure,'' the brokerage wrote in a note to clients.

Old Mutual Plc lost 1 percent to 99.5 pence. The London- based insurer that makes a 10th of its profit in the U.S. had its recommendation lowered to ``neutral'' from ``buy'' at UBS, which cited the company's increased provisions.

The provision ``has likely resulted in a loss of confidence among investors in the ability of management to control the wide spread of disparate businesses in the group,'' the analysts wrote.

Old Mutual last week said it took charges and provisions of 107 million pounds ($204 million) at a Bermuda-based unit that guaranteed clients' investment returns without properly hedging its risks.

To contact the reporter on this story: Adria Cimino in Paris at acimino1@bloomberg.net.