Global Stocks, U.S. Futures Fall, Led by Carmakers; Yen Rallies

By Sarah Jones

Oct. 24 (Bloomberg) -- Stocks tumbled around the world and U.S. index futures fell on deepening concern the global economic slump will crimp corporate earnings. The yen climbed to a 13-year high against the dollar, and Treasuries headed for their biggest weekly gain since 1995.

South Korea's Kospi Index sank 10 percent as the country's economy grew at the slowest pace in four years. Toyota Motor Corp. tumbled 6.4 percent after reporting its first drop in quarterly sales in seven years, while PSA Peugeot Citroen slipped 12 percent after cutting its forecast. HSBC Holdings Plc fell 10 percent after Morgan Stanley cut its price estimate on the stock.

The MSCI World Index lost 2.7 percent to 886.23 at 8:05 a.m. in London. The index has plunged 44 percent in 2008 as credit-related losses and writedowns topped $660 billion in the worst financial crisis since the Great Depression.

``The panic levels are now quite unseen,'' said Christian Gattiker, Zurich-based head of equity research at Bank Julius Baer & Co. ``It's difficult to have any words for this situation right now.''

Europe's Dow Jones Stoxx 600 Index declined 4.6 percent, and the MSCI Asia Pacific Index sank 5.8 percent. Futures on the Standard & Poor's 500 Index expiring in December dropped 3.9 percent.

Analysts have cut profit forecasts this year as the credit turmoil spread, threatening economic growth. Earnings for companies in Europe's 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.

Yen Climbs

The yen climbed against the dollar as the risk of a global recession prompted investors to slash carry trades, in which they fund purchases of higher-yielding assets with the Japanese currency.

Treasuries rose, pushing yields lower. The 10-year yield fell 35 basis points this week, the most since May 1995, on speculation government and central bank efforts to revive lending won't avert a global slowdown.

The cost of protecting high-risk, high-yield corporate bonds from default rose to a record in Europe, according to traders of credit-default swaps.

Toyota sank 6.4 percent to 3,200 yen. The world's second- largest automaker reported a decline in quarterly sales for the first time in seven years as the financial crisis crippled worldwide auto demand.

Toyota sold about 2.236 million vehicles worldwide in the three months ended Sept. 30, down 4.3 percent from a year earlier.

Peugeot, Volvo

Peugeot retreated 12 percent to 15.715 euros after Europe's second-biggest carmaker cut its full-year sales and earnings targets. Third-quarter sales dropped 5.2 percent to 13.3 billion euros ($17 billion) amid a European auto-market slump.

The company said its full-year operating profit will amount to 1.3 percent of revenue, abandoning a 3.5 percent target, while vehicle sales probably will fall 3.5 percent.

Volvo AB fell 19 percent to 33.2 kronor after the world's second-largest maker of heavy trucks cut its industry growth outlook for this year after curtailing production as demand slows and some customers struggle to finance the purchase of new equipment. Volvo said the European market for heavy trucks may be unchanged this year, while North America will contract by 10 percent.

HSBC, Europe's largest bank, tumbled 10 percent to 724.75 pence. Morgan Stanley slashed its estimate for the shares in London to 580 pence from 630 pence.

Air France

Air France-KLM Group slumped 9.4 percent to 10.745 euros after the carrier said it will struggle to meet its full-year profit targets. Europe's biggest airline said it will be ``very difficult'' to meet its 1 billion-euro operating-profit target for the 12 months through March 2009.

BHP Billiton Ltd. and Rio Tinto Group may lead mining shares lowered as base metals retreated.

BHP, the world's largest mining company, lost 4.5 percent to 786 pence as base metals including copper, tin and zinc retreated on the London Metal Exchange. Rio Tinto, the world's third-biggest mining company, declined 4.9 percent to 2,131 pence.

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