Stocks in Europe, Asia Decline; U.S. Index Futures Advance

By Sarah Jones

Sept. 10 (Bloomberg) -- Stocks in Europe and Asia declined for a second day on concern that credit losses at banks will increase, while a rebound in oil curbed earnings prospects for travel companies. U.S. index futures advanced.

Barclays Plc dropped 2.8 percent and UBS AG sank 2.6 percent. Analysts including Merrill Lynch & Co.'s Guy Moszkowski predict Lehman Brothers Holdings Inc. will report more writedowns and losses today. Ryanair Holdings Plc, Europe's biggest discount airline, dropped 3.1 percent as crude oil rose.

Europe's Dow Jones Stoxx 600 Index lost 0.4 percent to 278.37 at 10:05 a.m. in London, and the MSCI Asia Pacific Index decreased 0.7 percent. More than $17 trillion has been erased from global equities since October as a surge in mortgage defaults sparked $507 billion in bank writedowns and losses.

``In these periods of unprecedented volatility every word by banks or financial institutions is going to be scrutinized,'' said Andy Brough, a fund manager at Schroder Investment Management in London, which has about $12.7 billion. ``People are unsure what the assets of these companies are worth.''

Futures on the Standard & Poor's 500 Index rose 0.9 percent after FedEx Corp., the largest U.S. air-cargo carrier, said profit will surpass its forecast.

RSA Insurance Group Plc slumped 3.8 percent after JPMorgan Chase & Co. recommended selling shares of the U.K's second- largest non-life insurer, saying takeover prospects were limited. Sanofi-Aventis SA gained 4.7 percent on a report that Chief Executive Officer Gerard Le Fur will be replaced by GlaxoSmithKline Plc's Chris Viehbacher.

National Markets

National benchmark indexes dropped in 13 of the 17 western European markets that were open. Germany's DAX declined 0.3 percent, and the U.K.'s FTSE 100 lost 0.5 percent. CAC 40 added 0.1 percent.

Indexes extended declines after the European Commission cut its growth estimate for the euro area this year and signaled it may also lower its 2009 forecast as the U.S. and Asian economies cool.

Barclays, the U.K.'s third-biggest bank, fell 2.3 percent to 357.5 pence. UBS, the European bank hardest hit by subprime- related losses, declined 1.5 percent to 23.88 francs.

Lehman, the fourth-largest U.S. securities firm, will report third-quarter financial results today at about 7:30 a.m. in New York, a week earlier than planned.

The bank has been trying to raise capital and shed devalued real-estate assets that saddled the company with $8.2 billion in writedowns and credit losses in the past year.

Asset Sale Talks

Lehman plans to announce it's in talks with BlackRock Inc. to sell a package of mostly British residential real-estate assets, the Wall Street Journal reported, citing people it didn't identify.

The shares rebounded in German trading today after tumbling 45 percent in New York yesterday. Lehman led financial shares to their steepest drop since July after talks to sell a stake to Korea Development Bank broke down.

Ryanair Holdings, Europe's biggest discount airline, fell 3.1 percent to 2.71 euros. Carnival Plc, the world's largest cruise-line company, retreated 4.1 percent to 2,012 pence.

Oil jumped in New York as OPEC President Chakib Khelil called on members to stop producing more than the group's set quota after prices fell to almost $100 a barrel.

Crude for October delivery climbed as much as $1.41, or 1.4 percent, to $104.67 a barrel on the New York Mercantile Exchange.

EasyJet

EasyJet Plc, Europe's second-biggest discount airline, lost 3.5 percent to 362.5 pence. UBS AG downgraded the shares to `sell'' from ``neutral,'' which said gains in the stock don't reflect challenges it faces next year.

FedEx climbed 5 percent to $88.96 in German trading after saying first-quarter profit will exceed the company's forecast as fuel spending fell.

RSA led a retreat by insurers, declining 4.1 percent to 155.6 pence after JPMorgan cut the insurer to ``underweight'' from ``overweight'' as analysts said they see limited prospects for mergers and acquisitions at current levels.

``The risks are now on the downside,'' London-based analyst Andrew Hughes wrote in a note to investors.

Royal Bank of Scotland Group Plc lowered its recommendation for the shares to ``hold'' from ``buy.''

Old Mutual Plc lost 2.6 percent to 98.3 pence, after South Africa's biggest insurer named Julian Roberts as chief executive officer to replace Jim Sutcliffe, who has resigned as the company added to writedowns related to its U.S. business.

Roberts has been head of Old Mutual's Skandia unit since February 2006.

Sanofi-Aventis jumped 4.7 percent to 49.75 euros after Les Echos reported Gerard Le Fur is leaving. Sanofi shareholders Total SA and L'Oreal SA demanded the removal of Le Fur, who had lost the board's confidence, the French newspaper said, citing unidentified people.

Sanofi spokesman Jean-Marc Podvin said he had no information on the matter in an interview today.

To contact the reporter on this story: Sarah Jones in London at sjones35@bloomberg.net.