By Sarah Jones
Oct. 23 (Bloomberg) -- European stocks fell for a third day after ABB Ltd.'s orders were less than analysts estimated, Daimler AG cut its forecast and concern deepened the global economic slump will curb demand for commodities.
ABB, the world's largest builder of electricity grids, tumbled 20 percent. Daimler slumped 5.6 percent as the world's second-biggest maker of luxury cars suspended its share buyback program. BHP Billiton Ltd. and Rio Tinto Group sank more than 8 percent as copper tumbled below $4,000 a ton.
Europe's Dow Jones Stoxx 600 Index lost 1.7 percent to 205.93 at 3:14 p.m. in London. The index has plunged 44 percent in 2008 as credit-related losses and writedowns topped $650 billion in the worst financial crisis since the Great Depression.
``There is a recession in the U.S., and Europe, Japan and emerging markets are strongly impacted by it,'' said Dominique Netter, chairman of Edmond de Rothschild Asset Management, which oversees $36 billion in assets. ``The questions are how long will it be and what will be the severity.''
Analysts have cut profit forecasts this year as the credit turmoil spread, threatening economic growth. Earnings for companies in the Stoxx 600 will decline 4.4 percent in 2008, down from 11 percent growth predicted the start of the year, according to estimates compiled by Bloomberg.
Bond Risk, Money Markets
The cost of protecting corporate bonds from default surged to a record on concern that Argentina and Pakistan may default, worsening global economic turmoil. Credit-default swaps on the benchmark Markit iTraxx Crossover Index surged above 800 basis points for the first time, according to JPMorgan Chase & Co. prices.
Credit-default swaps on Russian bonds soared to 10.5 percent a year for the five-year contract, from 9.5 percent yesterday, according to CMA Datavision.
Standard & Poor's Ratings Services cut Russia's long-term sovereign debt rating outlook to negative because the cost of the government's ``bank rescue operation.'' The benchmark Micex Index tumbled 6 percent.
The cost of borrowing in dollars for three months in London fell by the smallest margin in nine days as concern about lending intensified even as central banks pour cash into money markets.
The London interbank offered rate, or Libor, for such loans dropped less than a basis point to 3.535 percent today, from 3.541 percent yesterday, the British Bankers' Association said. The overnight rate rose for the first time in 10 days, climbing 9 basis points to 1.21 percent. Asian rates increased for the first time in a week.
National Markets
National benchmark indexes fell in all 18 western European markets except the U.K. France's CAC 40 dropped 1 percent, while Germany's DAX sank 2.4 percent. The U.K.'s FTSE 100 added 0.1 percent.
U.K. retail sales fell in September as rising unemployment and the specter of a recession prompted British shoppers to curb spending. In France, business confidence slumped to the lowest in almost 15 years as the global credit crisis worsened, threatening to deepen a likely recession in the euro region's second-largest economy.
ABB declined 3.41 francs to 13.45 Swiss francs after saying orders at the Zurich-based supplier of factory robots and power substations advanced 7 percent to $8.89 billion. That is down from 33 percent growth a year earlier and short of the $9.56 billion predicted by analysts. Net income rose to a record $927 million, also short of analyst calculations.
Daimler, Fiat
Daimler fell 1.34 euros to 22,785 euros after the carmaker said earnings before interest and tax would be over 6 billion euros ($7.7 billion), down from 7 billion euros predicted earlier.
The carmaker suspended its share buyback program after the company reported a third-quarter profit of 213 million euros, missing analysts' estimate of 818 million euros in a Bloomberg News survey.
Fiat SpA dropped 3.9 percent to 6.29 euros after Italy's largest carmaker forecast earnings may plunge as much as 85 percent next year in a ``worst-case'' scenario if the financial crisis continues to sap credit and depress auto demand.
Net income may fall to 400 million euros if demand drops 20 percent. That compares with this year's profit forecast of 2.6 billion euros. The manufacturer declined to give official guidance for next year as it reported that third-quarter profit rose 1.9 percent.
BHP, the world's largest mining company, dropped 8.2 percent to 807.5 pence. Rio Tinto, the third-biggest, sank 11 percent to 2,124 pence. Xstrata Plc, the world's fourth-largest copper producer, fell 10 percent to 826.5 pence.
Commodities Slump
Copper led a retreat by base metals on the London Metal Exchange, falling below $4,000 a ton for the first time since November 2005. Gold dropped to the lowest in more than a year as the dollar gained.
Credit Suisse Group AG declined 8.5 percent to 42.58 francs after Chief Executive Officer Brady Dougan said he's ``cautious'' on the fourth-quarter and expects markets to remain ``very challenging.''
The Swiss bank posted a third-quarter loss of 1.26 billion Swiss francs ($1.08 billion), compared with a profit of 1.3 billion francs a year ago. The result was in line with a preliminary estimate Credit Suisse announced last week.
Nestle SA rallied 4.9 percent to 45.08 francs after the world's largest food company raised its forecast for sales growth and said nine-month revenue increased 3.4 percent to 81.36 billion francs.
To contact the reporter on this story: Sarah Jones in London at sjones35@bloomberg.net.
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