European Stocks Fall, Led by BHP, ENRC; U.S. Futures Decline

By Sarah Jones

Nov. 12 (Bloomberg) -- European stocks fell for a second day as declines by commodity producers and insurers overshadowed speculation of more interest-rate cuts and better-than-expected results from UniCredit SpA and J Sainsbury Plc. U.S. index futures and Asian shares also retreated.

BHP Billiton Ltd., the world's largest mining company, slipped 3.2 percent as copper and aluminum slumped to three-year lows. Eurasian Natural Resources Corp. dropped 8.7 percent after saying capital spending this year will be ``significantly'' below its earlier forecast. UniCredit rose 5.4 percent, and Sainsbury climbed 5.1 percent.

Europe's Dow Jones Stoxx 600 Index lost 0.4 percent to 211.26 at 1:05 p.m. in London. The gauged earlier rose up to 1.7 percent and then fell as much as 0.9 percent.

``Markets are going to remain volatile for the rest of the year,'' said Kevin Lilley, a London-based fund manager at Royal London Asset Management, which oversees about $63 billion. ``The macro picture continues to deteriorate but much of that is priced into the market already.''

Futures on the Standard & Poor's 500 Index fell 0.5 percent, and the MSCI Asia Pacific Index dropped 1.3 percent.

More than $29 trillion has been erased from the value of global equity markets as credit losses and writedowns totaled $918 billion in the worst financial crisis since the Great Depression. Europe's Stoxx 600 has lost 42 percent in 2008, headed for its worst year since records began in 1987.

Earnings for the 1,320 companies in western Europe that reported results since Oct. 7 declined 14 percent on average, trailing expectations by 5 percent, Bloomberg data show.

Russia Risk

Russia's RTS Index fell for a second day and the cost of protecting against a default by Russia soared after the country's central bank widened the ruble's trading band and lifted its benchmark interest rate to stem record capital outflows.

The RTS Index dropped 13 percent before trading was halted. Credit-default swaps on Russian government debt jumped 103 basis points to 7.17 percentage points, according to CMA Datavision Prices.

In western Europe, national benchmark indexes fell in 11 of 18 markets. The U.K.'s FTSE 100 climbed 0.5 percent after BOE Governor Mervyn King said the bank was ready to cut rates as low as needed. Germany's DAX rose 0.3 percent, and France's CAC 40 slipped 0.2 percent.

BHP, the world's largest mining company, slid 3.2 percent to 986.5 pence as copper and aluminum fell as bulging stockpiles heightened speculation that mining companies need more production cuts to match a slump in demand.

Anglo American Plc, the world's third-biggest, fell 4.9 percent to 1,327 pence. Vedanta Resources Plc, the largest copper producer in India, retreated 6.7 percent to 637.5 pence.

ENRC, Swiss Life

ENRC lost 8.7 percent to 258.5 pence, extending yesterday's 9.9 percent tumble. The Kazakh ferroalloy producer is reviewing the timing of expansion projects and said full-year capital expenditure will be ``significantly'' below the $1.7 billion previously targeted after demand weakened.

Tullow Oil Plc lost 5.2 percent after the explorer cut its full-year production target.

Swiss Life Holding slumped 15 percent to 93 francs after Switzerland's biggest life insurer said full-year profit won't meet the 1.8 billion to 1.9 billion Swiss franc ($1.6 billion) target announced in August.

The company plans to halt a share buyback after market turmoil eroded the value of investments. Excluding a one-off gain of 1.5 billion francs from the sale of units, the insurer said it will report a full-year loss from continuing operations.

UniCredit, Sainsbury

UniCredit climbed 5.4 percent to 1.96 euros. The bank reported a 54 percent drop in third-quarter profit to 551 million euros ($694 million) that still beat analysts' estimates of 428 million-euros.

Sainsbury jumped 5.1 percent to 286 pence after the third- largest U.K. supermarket chain said first-half pretax profit of 272 million pounds before one-time items beat the 267.9 million- pound estimate of 12 analysts. The company raised its first-half dividend by 20 percent to 3.6 pence a share.

Hammerson Plc, a U.K. shopping center owner, climbed 5.2 percent to 659.5 pence. British Land Co. Plc, the U.K.'s second- largest real estate investment trust, rallied 4 percent to 578.5 pence.

BOE Governor King said policy makers are prepared to cut rates as low as needed to prevent recession from fueling deflationary pressures. The central bank slashed its key rate by 1.5 percentage points on Nov. 6 to the lowest since 1955.

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