Stocks in Europe and Asia, U.S. Futures Drop on Profit Concern

By Michael Patterson

Aug. 1 (Bloomberg) -- Stocks in Europe and Asia fell as Bayerische Motoren Werke AG abandoned its profit forecast and investors speculated credit losses will erode banks' earnings. U.S. index futures retreated on General Motors Corp.'s worse- than-expected loss.

BMW, the world's largest maker of luxury vehicles, tumbled the most since March 2003 after saying ``conditions for the automobile industry have deteriorated sharply.'' GM, the biggest U.S. carmaker, dropped after reporting a second-quarter loss of $15.5 billion. Sumitomo Mitsui Financial Group Inc. of Japan had its steepest slide in six months on lower profit.

The MSCI World Index lost 0.6 percent to 1,359.11 at 12:30 p.m. in London. The benchmark for global equities has tumbled 14 percent this year as slowing economic growth and more than $480 million of credit losses and asset writedowns at banks prompted analysts to reduce their earnings projections.

``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.''

Europe's Dow Jones Stoxx 600 Index declined 0.7 percent, paring its weekly advance, as lower metals prices dragged down commodity producers including BHP Billiton Plc and Elan Corp. tumbled 48 percent. The MSCI Asia Pacific Index sank 1.2 percent after Suncorp-Metway Ltd. and Mitsui & Co. fell.

Jobs Report

Futures on the Standard & Poor's 500 Index dropped 0.1 percent before a Labor Department report today that may show payrolls sank 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 fell yesterday, sending the S&P 500 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 as former Federal Reserve Chairman Alan Greenspan told CNBC that financial market turmoil isn't showing signs of ending.

BMW tumbled 7.9 percent to 26.63 euros today after saying rising commodity prices, a weak dollar and the slowing U.S. economy ``have made business conditions significantly more difficult.'' The company reported second-quarter earnings that trailed analysts' estimates and said sales declined.

GM lost 5.9 percent to $10.42 in New York. Excluding costs considered by GM to be one-time expenses, the loss was $11.21 a share. On that basis, the company was forecast to lose $2.40 a share, the average of 12 analysts surveyed by Bloomberg.

`Dismal Earnings'

Daimler AG, the world's second-largest maker of luxury cars, lost 2.8 percent to 57.69 euros. Volkswagen AG, Europe's biggest automaker, fell 3.9 percent to 196.71 euros.

``BMW's dismal earnings have investors wincing,'' said Oliver Stevens, head of dealing at IG Markets in Melbourne.

A measure of financial stocks in the MSCI Asia Index fell 1.8 percent, extending its loss this year to 21 percent, the biggest decline among 10 industry groups.

Sumitomo Mitsui, Japan's second-largest bank by market value, plunged 7.7 percent after saying profit fell by half on lower fee income and swelling bad-loan costs.

Suncorp-Metway slumped 14 percent to A$11.53, the sharpest drop since June 1989. Australia's third-largest general insurer said profit dropped about 50 percent and its bad-debt charge tripled.

Lafarge SA retreated the most since June 2006, leading European construction companies lower, after the world's biggest cement producer said delays in Algeria, Iraq and the United Arab Emirates will affect 2.5 million tons of production and should take several months to resolve. The shares sank 7.3 percent to 81.37 euros.

Earnings Estimates

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.

Earnings at oil and gas companies in the Stoxx 600 may rise by 6.3 percent on average this year and raw-materials producers may post 16 percent earnings growth, according to analysts' estimates. Both industries fell today as prices for crude, gold and copper retreated.

BHP Billiton, the world's largest mining company, lost 4.1 percent to 1,623 pence. Royal Dutch Shell Plc, Europe's biggest oil company by market value, slipped 0.7 percent to 22.74 euros. Eni SpA, Italy's largest oil producer, decreased 1.9 percent to 21.32 euros.

Retailers, Airlines

StatoilHydro ASA retreated 5.9 percent to 158.8 kroner. Norway's largest oil and gas company said output rose to an average 1.710 million barrels of oil equivalent a day from 1.671 million barrels a day a year earlier. That missed the average 1.72 million-barrel estimate of 16 analysts polled by SME Direkt for TDN Finans.

A rally in airlines and retailers on lower oil prices limited the decline in the Stoxx 600.

Iberia Lineas Aereas de Espana SA climbed 4.2 percent to 2.01 euros and Air France-KLM added 1.7 percent to 16.34 euros. Crude oil fell for a second day in New York, extending the biggest monthly decline since 2004, on concern global consumption is falling amid slowing economic growth.

Next Plc, the U.K.'s second-largest clothes retailer, increased 1.8 percent to 971.5 pence, while J Sainsbury Plc, the country's third-biggest supermarket chain, added 0.9 percent to 318.25 pence.

Ahold Gains

Royal Ahold NV jumped 6 percent to 7.77 euros. The Dutch owner of U.S. Stop & Shop supermarkets said sales fell to 5.78 billion euros ($9 billion) 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.

ArcelorMittal dropped 2.9 percent to 55.59 euros. The world's largest steelmaker is considering making an offer for Alpha Natural Resources Inc. to trump Cleveland-Cliffs Inc.'s $8.8 billion bid, the Financial Times reported, citing unidentified people close to the companies.

Calls to ArcelorMittal's London-based spokesman Haroon Hassan and Alpha Natural's head office in Abingdon, Virginia, outside normal business hours weren't immediately returned.

Elan had the biggest drop in the Stoxx 600 after the drugmaker and Biogen Idec Inc. said two new cases of a deadly brain infection have been confirmed in patients taking their multiple sclerosis drug Tysabri. The shares lost 48 percent to 6.98 euros.

The Stoxx 600 is on course for a 0.1 percent weekly gain, the third straight advance, while the S&P 500 has risen 0.8 percent. The MSCI Asia Pacific Index dropped 1.7 percent.

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