U.S. Stock-Index Futures Decline as Energy Producers Retreat

By Daniela Silberstein and Lynn Thomasson

Sept. 3 (Bloomberg) -- U.S. stock-index futures dropped, led by energy producers, as oil retreated for a fourth day and Ospraie Management LLC said it will close its biggest hedge fund following bad bets on commodity shares.

PetroHawk Energy Corp. tumbled 3.2 percent and Anadarko Petroleum Corp. slipped 0.9 percent as oil slid more than $2 a barrel. XTO Energy Inc., one of Ospraie's largest shareholdings, declined 1.2 percent. Ambac Financial Group Inc. rallied 13 percent after winning regulatory approval for its new municipal bond insurer. European and Asian shares dropped on concern slowing economic growth will reduce earnings as credit-market losses increase at banks.

Investors will also focus on a report that may show factory orders increased in July on overseas demand and a rise in oil that kept refiners busy. Crude has since slumped 27 percent from its July 11 record, boosting shares of consumer companies while sending energy producers lower.

``The materials stocks and the precious-metal areas are going to be subject to further weakness,'' said David Darst, who helps oversee more than $700 billion as chief investment strategist at Morgan Stanley Global Wealth Management in New York. ``They had such a straight run up.''

Futures on the S&P 500 expiring in September lost 3.7, or 0.3 percent, to 1,272.8 as of 8:32 a.m. in New York. Dow Jones Industrial Average futures slid 36 to 11,478. Nasdaq-100 Index futures slipped 8.5 to 1,843.25.

Oil, Subprime

The S&P 500 has rebounded 5.2 percent from its 2008 low on July 15 as oil tumbled. The index has still lost 13 percent this year as subprime-related losses at global banks climbed above $500 billion and the U.S. economy teetered on the brink of a recession.

Crude for October delivery fell as much as $2.39, or 2.2 percent, to $107.32 a barrel on the New York Mercantile Exchange.

Ospraie Management, the investment firm run by Dwight Anderson, will close its biggest hedge fund after slumping 38.6 percent this year. The New York-based Ospraie Fund fell 26.7 percent in August after a ``substantial sell-off'' in energy, mining and resource equity investments, Anderson said in a letter to investors yesterday.

``In the short term everything revolves around the oil price,'' said Roger Kunz, head of investment strategy at Clariden Leu AG in Zurich, which manages the equivalent of $120 billion. ``Ospraie demonstrates that for every piece of good news we have bad news.''

Ambac Rallies

Ambac, the world's second-biggest bond insurer, rose 96 cents to $8.03. Regulators in Wisconsin, which has jurisdiction over the New York-based company, approved a plan to move $850 million out of Ambac Assurance Corp. into the new business, called Connie Lee.

Goldman Sachs Group Inc. slipped $1.52 to $163.80. The world's biggest securities firm had its third-quarter and 2008 earnings estimates cut by Credit Suisse Group AG analyst Susan Katzke for the second time in a month, citing a slowdown in trading and investment banking.

The Commerce Department may say at 10 a.m. New York time factory orders rose 1 percent in July compared with a 1.7 percent gain the previous month. The Federal Reserve will release its regional survey, known as the Beige Book for the color of its cover, at 2 p.m. in Washington.

Coca-Cola Co. dropped 45 cents to $51.51. The world's biggest soft-drinks maker agreed to buy China Huiyuan Juice Group Ltd. for HK$17.9 billion ($2.3 billion) to double its share of the fruit-juice market in the most populous nation. Coca-Cola will pay more than double the valuation of Huiyan's closest rival.

Microsoft, Google

Microsoft Corp. fell 20 cents to $26.90 after Google Inc., owner of the most popular Internet search engine, introduced a free Web browser to challenge the world's largest software maker's decade-long dominance of the market. Google gained 96 cents to $466.21

Staples Inc. dropped 11 cents to $24.66 in Germany. The world's largest office-supplies retailer said second-quarter profit fell as small companies reined in spending. Net income declined to $150.2 million, or 21 cents a share, from $178.8 million, or 25 cents, a year earlier, the company reported.

To contact the reporters on this story: Daniela Silberstein in Zurich at dsilberstei2@bloomberg.net; Lynn Thomasson in New York at lthomasson@bloomberg.net.