European Stock Futures Fall; Air France, Continental May Drop

By Adam Haigh

Sept. 1 (Bloomberg) -- European stock-index futures fell, following declines in the U.S. and Asia, after higher oil and gasoline prices dimmed the earnings outlook for airlines.

Air France-KLM Group may follow its U.S.-traded shares lower as Hurricane Gustav approached the U.S. Gulf coast, forcing the closure of refineries and evacuation of offshore rigs and pushing crude up as much as 2.2 percent. Continental AG may retreat after Merrill Lynch & Co. recommended selling shares of Europe's second-largest car-parts maker.

U.S. markets are closed today for the Labor Day holiday. The Standard & Poor's 500 Index sank 1.4 percent on Aug. 29, while Asian shares dropped the most in almost two weeks today.

``The combination of a holiday weekend and the accompanying uncertainty of the impact of Hurricane Gustav's arrival on the U.S. Gulf Coast unsurprisingly pushed Wall Street lower ahead of Friday's close,'' said Matt Buckland, a trader at CMC Markets in London. ``We're expecting to see this cautious sentiment carry over into Europe as the new month's trading gets underway.''

Futures on the Dow Jones Euro Stoxx 50 Index, a benchmark for the euro region, lost 28, or 0.8 percent, to 3,345 at 7:30 a.m. in London. The U.K.'s FTSE 100 Index is set to open 44 points lower, according to IG Markets.

Europe's Dow Jones Stoxx 600 Index added 1.6 percent last month, its first monthly gain since April. The measure has still lost 21 percent this year as the global economy cooled and the world's largest banks posted writedowns and credit losses of more than $500 billion.

Earnings Estimates

Profits for companies in the Stoxx 600 will decline 2.1 percent on average in 2008, Bloomberg data shows.

The strains in the global money markets that pushed relative borrowing costs higher will probably persist ``for some time'' as financial institutions struggle to raise cash, according to the Bank for International Settlements.

In the U.K., house prices slid by the most since at least 2001 in August as economic growth stagnated, Hometrack Ltd. said. The London-based research company added that an end to the property slump is ``still some way off.''

Air France-KLM may fall after its American depositary receipts dropped 1.1 percent from the close of trading in Paris on Aug. 29. Crude oil for October delivery rose as much as $2.54, or 2.2 percent, to $118 a barrel today in electronic trading on the New York Mercantile Exchange.

Continental might decline after Merrill cut its recommendation on the stock to ``underperform'' from ``neutral.''

`Underperform'

The tiremaker may need to ``warn'' on its operating targets in the coming months ``like most of its peers have already done,'' London-based analyst Thomas Besson wrote in a note today.

Iliad SA may retreat as Merrill downgraded the French provider of broadband Internet to ``underperform'' from ``buy.''

Vivendi SA will probably gain. The owner of France's second- largest mobile-phone company said second-quarter profit excluding one-time gains and some costs, which Vivendi calls adjusted net income, rose 0.3 percent to 757 million euros ($1.1 billion). Analysts had predicted 728 million euros, the median of seven estimates in a Bloomberg News survey via e-mail.

GDF Suez SA, the world's second-biggest utility, might be active after saying first-half profit rose 14 percent on higher power and natural gas prices.

Allianz SE may advance. Commerzbank AG agreed to buy the insurer's Dresdner Bank unit for 9.8 billion euros, which will double its retail clients to about 11 million, surpassing Deutsche Bank AG's with 9.7 million.

To contact the reporter on this story: Adam Haigh in London at ahaigh1@bloomberg.net