European Stock-Index Futures Drop; UBS, Deutsche Bank May Fall

By Adria Cimino

Oct. 6 (Bloomberg) -- European stock futures sank on concern the credit crisis is deepening as BNP Paribas SA took control of Fortis, Germany was forced to rescue Hypo Real Estate Holding AG and governments pledged to protect depositors. Asian stocks and U.S. stock-index futures also fell.

UBS AG, the European bank hardest hit by the credit crisis, may drop after Oppenheimer & Co. Inc. analyst Meredith Whitney said its earnings power may be ``challenged.'' U.S.-traded shares of UBS and Deutsche Bank AG, Germany's biggest, slid. BHP Billiton Ltd., the world's largest mining company, sank in Asia as metals prices dropped.

Futures on the Dow Jones Euro Stoxx 50 Index, a benchmark for the euro region, lost 172, or 5.5 percent, to 2,956 at 7:34 a.m. in London. The U.K.'s FTSE 100 Index may decrease 209, according to Cantor Index, a betting firm.

``It's like a fire,'' said Emmanuel Soupre, a fund manager at Neuflize OBC Asset Management in Paris, which oversees the equivalent of $33 billion. ``It's easier to extinguish five minutes after the start. Now we're about an hour into it. We have to act quickly to assure the continuity of the financial system to avoid an irreversible contamination of the entire economy.''

The MSCI Asia Pacific Index fell 3.8 percent today, headed for the lowest close since July 26. Standard & Poor's 500 Index futures slid 1.7 percent to 1,089.10.

Treasuries rose for a fourth day, sending two-year notes to their longest winning streak in six weeks. The euro fell to a 13-month low against the dollar and dropped to its weakest versus the yen in more than two years.

`Whatever it Takes'

BNP Paribas, France's biggest bank, agreed to take control of Fortis in Belgium and Luxembourg for 14.5 billion euros ($19.8 billion) after an earlier government rescue failed to ensure the company's stability.

The German government and the country's banks and insurers agreed on a 50 billion-euro rescue package for commercial property lender Hypo Real Estate after an earlier bailout faltered.

U.K. Chancellor of the Exchequer Alistair Darling said Britain is ``ready to do whatever it takes'' to help its banks. French President Nicolas Sarkozy, who convened an Oct. 4 meeting with leaders of Europe's four biggest economies, called for a global summit ``as soon as possible'' to implement ``a real and complete reform of the international financial system.''

Germany will guarantee the savings of private account holders, Chancellor Angela Merkel said, in a bid to prevent a rush of withdrawals. Denmark said commercial lenders will provide as much as 35 billion kroner ($6.4 billion) over the next two years to a fund to insure depositors against losses.

$700 Billion Bailout

The S&P 500 tumbled 9.4 percent last week, the steepest slump since the September 2001 terrorist attacks, as concern the U.S. is headed for a recession overshadowed passage of a $700 billion bank bailout.

Europe's Stoxx 600 closed at the lowest since January 2005 on Sept. 29, then recouped some of losses as banks rallied on speculation U.S. lawmakers would approve the $700 billion financial-market rescue plan. U.S. President George W. Bush signed the package last week after it was passed by Congress.

American depositary receipts of UBS lost 5.7 percent from the stock's close in Switzerland. The bank's earnings power may be ``challenged for some time,'' and UBS may write down $3.1 billion in the third quarter, Oppenheimer's Whitney wrote in a note to clients. She cut her third-quarter earnings-per-share estimate to 13 cents from 43 cents.

ADRs of Deutsche Bank, Germany's biggest, retreated 5.5 percent from the share's close.

Boosting Capital

UniCredit SpA, Italy's biggest bank by assets, will sell its 3.5 percent stake in insurer Assicurazioni Generali SpA, Chief Executive Officer Alessandro Profumo said. UniCredit yesterday said it will boost capital by as much as 6.6 billion euros ($9 billion) in an effort to calm investor concerns about the strength of its finances.

BHP Billiton slid 2.1 percent in Australian trading, while Rio Tinto Group, the world's second-largest iron-ore exporter, tumbled 5 percent.

Copper, zinc and aluminum plunged by the exchange-imposed daily limit in Shanghai, catching up with losses on international markets in the past week when China's exchanges were closed for holidays.

ADRs of BP Plc, Europe's second-largest oil company by market value, lost 3.2 percent as crude fell for a fourth day. The contract for November delivery fell as much as 2.4 percent to $91.60 on the New York Mercantile Exchange.

HSBC Holdings Plc cut its forecast for European growth next year as global financial turmoil spreads. The 13-member euro region may expand 0.4 percent in 2009, economists led by Janet Henry at HSBC, Europe's biggest bank, wrote in a note to clients dated Oct. 3, cutting their earlier 0.9 percent prediction.

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