European Stocks, U.S. Index Futures Advance as Crude Oil Drops

By Adam Haigh

Sept. 25 (Bloomberg) -- Stocks in Europe and U.S. index futures advanced as oil's retreat lifted carmakers and Royal DSM NV raised its profit forecast. Asian shares fell for a third day on concern the bank bailout plan may be delayed.

Bayerische Motoren Werke AG added 1.7 percent and General Motors Corp. climbed 2 percent in Germany as crude dropped for a third day. DSM, the world's largest maker of vitamins, rallied 2.8 percent. Repsol YPF SA rose 3.4 percent as Expansion reported Total SA and Royal Dutch Shell Plc are considering buying the Spanish oil company. Swiss Reinsurance Co. increased 1.5 percent, leading insurers higher, after saying it has ``sufficient'' liquidity even when no external funding is available.

Europe's Dow Jones Stoxx 600 Index added 0.9 to 268.03 as of 9:59 a.m. in London. Futures on the Standard & Poor's 500 Index gained 0.4 percent. MSCI Asia Pacific Index retreated 1 percent on concern the U.S. Congress won't agree to a bank bailout plan soon enough to avert a global recession.

``This rescue package is extremely important and has to get through Congress,'' Stephen Thornber, who oversees about $1 billion as a London-based money manager at Threadneedle Asset Management, said in an interview on Bloomberg Television. ``It's about providing liquidity, and more than that, improving sentiment.''

Growing speculation that lawmakers will derail the White House's plan to rescue banks even as Federal Reserve Chairman Ben S. Bernanke warned of ``grave threats'' facing the American economy pushed stocks lower in Europe and the U.S. yesterday. President George W. Bush called for a bipartisan approach to the rescue plan and said the U.S. will face a ``long and painful'' recession unless a bailout is agreed.

Asian Banks

Mitsubishi UFJ Financial Group Inc. fell 1.6 percent, leading banks lower in Asia, as money-market rates in the region's biggest financial centers rates jumped on concern U.S. lawmakers may delay or dilute the rescue plan.

The MSCI World Index has erased more than a third of its biggest two-day rally in 38 years posted on Sept. 18 and 19 after the $700 billion bailout plan was proposed and regulators in the U.S. and U.K. imposed bans on short selling of financial stocks.

American equities may start to underperform European stocks, JPMorgan Chase & Co. strategist Mislav Matejka wrote in a note to clients today.

``Some of the tailwinds that U.S. stocks enjoyed so far, will become supports for European companies, namely the onset of central bank easing,'' Matejka said.

German Consumer Confidence

German market-research company GfK AG's consumer confidence index for October increased to 1.8 from a revised 1.6. Economists expected the gauge to be unchanged at 1.5, according to the median of 29 estimates in a Bloomberg News survey.

U.S. presidential nominee John McCain yesterday said the bank rescue proposal won't pass Congress in its current form and urged Democratic rival Barack Obama to join him in suspending their presidential campaigns to work with lawmakers on developing a plan.

The rescue plan won't be enough to revive the finance industry, said investor Marc Faber, who forecast the so-called Black Monday crash in 1987.

BMW, the world's largest luxury carmaker, added 1.7 percent to 28.94 euros. GM, the biggest U.S. automaker, climbed 2 percent to $10.56 in Germany.

Crude oil for November delivery fell as much as $1.52, or 0.8 percent, to $104.21 a barrel in after-hours electronic trading on the New York Mercantile Exchange, erasing earlier gains amid growing concerns over U.S. demand.

DSM Forecast

DSM advanced 2.8 percent to 35.82 euros. The company raised its profit forecast for the fourth time this year as prices advance and demand for fertilizer grows.

``There are still interesting companies in Europe that have solid business models that can weather the storm,'' said Chirin Gill, a London-based fund manager at Daiwa SB Investments, which oversees about $60 billion.

Repsol gained 3.4 percent to 21.12 euros. Builder Sacyr Vallehermoso SA has said it may put its 20 percent stake in Madrid-based Repsol up for sale, which has spurred the interest of Total and Shell, the newspaper said, citing unidentified people close to the conversations.

A Repsol spokesman, who declined to be identified in line with company policy, said Repsol understands Sacyr doesn't wish to sell its stake. He said in a phone interview he couldn't comment on reports of plans by other companies. Total spokeswoman Lisa Wyler said she couldn't comment on the report. Shell couldn't immediately be reached.

Swiss Re

Swiss Re climbed 1.5 percent to 63.5 francs as the world's second-largest reinsurer revealed it lost an estimated 277 million francs ($256 million) on structured credit default swaps since the end of the second quarter.

Mitsubishi UFJ, Japan's biggest banking group, fell 1.6 percent to 914 yen. National Australia Bank Ltd., the nation's largest by assets, slid 2.5 percent to A$24.96.

Daily Mail and General Trust Plc declined 8.3 percent to 306.45 pence after forecasting full-year earnings at the lower end of analysts' estimates, citing ``worsening economic conditions.''

Natixis SA slid 7.2 percent to 2.71 euros. Merrill Lynch & Co., Credit Suisse Group AG and Lazard-Natixis are selling 57.3 million shares in the French bank, according to an e-mail sent to clients by the banks.

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