Stocks in Europe, Asia Drop; U.S. Futures Are Little Changed

By Adria Cimino

Aug. 13 (Bloomberg) -- Stocks in Europe and Asia declined for a second day as concern deepened banks will report more losses and the economic slowdown will drag down earnings. U.S. index futures were little changed.

Hypo Real Estate Holding AG, Germany's second-biggest commercial-property lender, fell to the lowest this month after profit tumbled 95 percent on writedowns. HBOS Plc and UBS AG also slid. Mitsui Fudosan Co. led developers lower in Tokyo as Japan's economy contracted. Telstra Corp., Australia's biggest phone company, sank the most since March as earnings missed estimates.

The MSCI World Index lost 0.4 percent to 1,351.42 at 8:59 a.m. in London as seven of the 10 industry groups fell. Financial firms have led the index to a 15 percent drop this year.

Banks ``still have a way to go with writedowns,'' Philippe Gijsels, Brussels-based senior equity strategist at Fortis Global Markets with $62 billion under management, said in a Bloomberg Television interview. ``The economic slowdown worldwide will impact banks' earnings.''

Europe's Dow Jones Stoxx 600 Index slid 0.8 percent, while the MSCI Asia Pacific Index decreased 1.1 percent. Futures on the Standard & Poor's 500 Index fell less than 0.1 percent.

More than $12 trillion has been erased from global equity markets this year as credit-related losses topping $500 billion and accelerating inflation threaten economic and profit growth.

Dallas Federal Reserve Bank President Richard Fisher said the current financial turmoil is worse than the savings and loan crisis of the late 1980s and early 1990s, the Dallas Morning News reported yesterday.

More Provisions

``Worries linked to the credit crisis are justified,'' said Oumkaltoum El Ouarti, a fund manager at Richelieu Finance in Paris, which oversees $6.2 billion. ``Provisions may increase in the second half.''

Oil's retreat from a record high and better-than-expected earnings from companies including Volkswagen AG and Nokia Oyj have spurred a rebound in Europe's Stoxx 600 from a three-year low on July 15, trimming this year's decline in the index to 20 percent.

BP Plc, Royal Bank of Scotland Group Plc and Standard Chartered Plc are among stocks that trade today without the right to the latest dividend.

Hypo Real Estate fell 4.1 percent to 17.89 euros. The lender said second-quarter pretax profit plunged 95 percent because of writedowns on debt-related investments.

The company said market conditions are ``still uncertain.'' It reported an investment loss of 135 million euros ($202 million) in the quarter, higher than the 46 million euros in a Bloomberg survey of analysts.

HBOS, the U.K.'s largest mortgage lender, lost 4 percent to 317.75 pence. UBS, Switzerland's biggest bank, slid 3.7 percent to 21.78 francs.

ING, Mitsui Fudosan

ING Groep NV fell 1.7 percent to 22.61 euros. The biggest Dutch financial-services company said second-quarter profit dropped 25 percent as investment earnings at the wholesale- banking and insurance units declined.

The company had a 2.3 billion-euro U.S. subprime-mortgage portfolio at the end of the first quarter, while Alt-A mortgage assets amounted to 22.8 billion euros. Alt-A loans rank between subprime and prime.

Mitsui Fudosan, Japan's No. 1 developer, fell 3.5 percent to 2,315 yen. Japan's economy contracted 0.6 percent last quarter, the government said today, bringing the country to the brink of its first recession in six years, as exports fell and consumers spent less. The GDP report also showed housing investment dropped 3.4 percent last quarter, compared with expectations for an increase.

Telstra, Oerlikon

Telstra lost 4 percent to A$4.32, on course for its largest drop since March 3. Profit rose 13 percent in the six months ended June 30 to A$1.77 billion ($1.5 billion), less than the median estimate in a Bloomberg survey. Its forecast for an 8 percent increase in earnings before interest and taxes this year trailed estimates compiled by Bloomberg.

OC Oerlikon Corp. fell 11 percent to 247.5 francs after the world's biggest maker of spinning machines for textiles cut its profit forecast for 2008. Oerlikon predicted a 33 percent drop in operating profit, and will book 350 million Swiss francs ($322 million) in writedowns from three units.

Tandberg ASA jumped 16 percent to 113.5 kroner. The Norwegian maker of video-conferencing equipment said it received an approach from a private-equity company and started ``preliminary discussions'' about a possible bid.

DSG International Plc fell 9.1 percent to 55.75 pence, after subtracting for the effect of its dividend payout. JPMorgan cut its recommendation on the stock to ``underweight'' from ``neutral.''

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