European, U.S. Stock Futures Slump; Societe Generale May Fall

By Adria Cimino

Sept. 26 (Bloomberg) -- European and U.S. stock-index futures sank after negotiations on the $700 billion financial bailout plan stalled and Washington Mutual Inc. became the biggest U.S. bank failure in history. Asian shares declined.

U.S.-traded securities of Societe Generale SA, France's third-largest bank by assets, and Commerzbank AG slid. HSBC Holdings Plc, Europe's biggest bank by market value, may be active after cutting 1,100 jobs as the deepening financial crisis threatens to extend a decline in profit.

Futures on the Dow Jones Euro Stoxx 50 Index, a benchmark for the euro region, lost 1.4 percent to 3,182 at 7:37 a.m. in London. The U.K.'s FTSE 100 Index may decrease 72, according to Cantor Index, a betting firm. Futures on the Standard & Poor's 500 Index expiring in December dropped 1.5 percent to 1,195.9, while the MSCI Asia Pacific Index slid 0.7 percent to 113.99.

``There's a lot of hesitation on the plan,'' said Pierre- Yves Gauthier, a founding partner at Alphavalue in Paris. ``This stalling is creating more worries. Politics have taken over.''

A group of House Republicans led by Eric Cantor of Virginia said they wouldn't support a plan based on the approach outlined by Treasury Secretary Henry Paulson and backed by President George W. Bush and Democratic leaders. The discord sent Paulson back into a late-night meeting on Capitol Hill with lawmakers. Lawmakers are set to meet again this morning.

U.S. stocks advanced yesterday as investors speculated Congress would agree on the bailout, trimming the S&P 500's drop this week to 3.7 percent. Europe's Stoxx 600 has lost 2.6 percent in the period.

Treasuries, Dollar

``There was a solid belief late yesterday that the U.S. bailout plan was close to being accepted with bullish comments from politicians helping cheer stocks on Wall Street,'' wrote Matthew Buckland, a dealer at CMC Markets in London. After ``a change of note overnight, we expect to see European equities start the week's final session in a highly defensive mood.''

American depositary receipts of Societe Generale lost 1.9 percent from the stock's close in Paris, and Commerzbank, Germany's second-biggest lender, also slipped 1.9 percent from the closing price.

Treasuries rose, with two-year notes heading for a fifth week of gains. The notes extended their longest winning streak since February as Seattle-based Washington Mutual was seized.

WaMu, which was acquired by JPMorgan Chase & Co., is the latest casualty of a financial crisis that drove Lehman Brothers Holdings Inc. and IndyMac Bancorp out of business and led to the hastily arranged rescues of Merrill Lynch & Co. and Bear Stearns Cos., which was itself absorbed by JPMorgan.

Dollar

The dollar declined, heading for a second weekly decline against the yen.

HSBC may be active. The company cut 1,100 jobs in its global banking and markets division. The reductions in the division's back-office operations amount to about 4 percent of HSBC's wholesale banking workforce, Hong Kong-based spokesman Gareth Hewett said.

``We're taking these steps in the light of the current global business and economic environment and our cautious outlook for 2009,'' Hewett said.

Adecco SA, the world's largest supplier of temporary workers, said it sees weak markets in the U.S. and Canada for the rest of the year.

Air France-KLM Group may be active after Europe's biggest airline said Chief Executive Officer Jean-Cyril Spinetta will step down after 11 years in the job, to be replaced by Chief Operating Officer Pierre-Henri Gourgeon.

Conergy AG will probably gain. Germany's second-largest solar company said its creditors agreed to extend a bridging loan to the end of the year.

Vestas Wind Systems A/S had its recommendation cut to ``underweight'' from ``equal-weight'' at Morgan Stanley, which said the stock looks ``unjustifiably expensive.''

The brokerage also cited ``early signs of softening demand among small developers'' and an increase in raw-material prices.

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