By Sarah Jones
Nov. 11 (Bloomberg) -- Stocks fell in Europe and Asia, led by financial shares and commodity producers, on a worsening profit outlook and drop in oil and metals prices. U.S. index futures retreated.
Julius Baer Holding AG slipped 5.9 percent in Zurich after saying assets under management declined, while Taylor Wimpey Plc tumbled 11 percent as the U.K. homebuilder said orders have fallen 40 percent. Citizen Holdings Co. dropped 9.5 percent in Tokyo after the world's largest watchmaker cut its profit forecast. Starbucks Corp., the world's biggest chain of coffee shops, sank 6.1 percent on worse-than-expected earnings.
The MSCI World Index lost 1.6 percent to 925.40 at 1:38 p.m. in London, falling for the first time in three days. More than $28 trillion has been erased from the value of global equity markets as credit losses and writedowns topped $920 billion in the worst financial crisis since the Great Depression.
``Markets are shifting their concern from the financial sector to the wider economy and very clear signs of recession,'' said Andrew Popper, chief investment officer at SG Hambros in London where he helps manage about $13.7 billion. ``There is a lot of negative news out there and a lot of negative news about the economy which continues to weigh on the market and how that will impact on earnings.''
Futures on the Standard & Poor's 500 Index slid 1.9 percent. Credit Suisse Group AG cut its mid-2009 forecast for the S&P 500 by 13 percent to 1,050 on expectations developed economies are headed for the worst recession since 1945. The gauge closed down 1.3 percent to 919.21 yesterday.
Europe's Dow Jones Stoxx 600 Index declined 2.9 percent with Erste Group Bank AG and BHP Billiton Ltd. losing at least 5 percent. The MSCI Asia Pacific Index dropped 3.5 percent as Australian business confidence fell to a record low.
Earnings Tally
Earnings for the 1,246 companies in western Europe that reported results since Oct. 7 declined 11 percent on average, trailing expectations by 4.5 percent, Bloomberg data show. Profits for the 428 companies in the S&P 500 that have reported, including Boeing Co. and AT&T Inc., have shrunk 17 percent, while missing predictions by 4.7 percent, the data show.
The euro-area economy will probably contract 0.7 percent next year, Morgan Stanley wrote in a report, citing the financial market turmoil and slowdown abroad. That's down from 0.2 percent growth forecast earlier, the brokerage said.
``This puts the current recession on par with the early 1990s,'' Elga Bartsch, chief European economist at Morgan Stanley in London, wrote.
Growth in the U.S. economy will slow to 1.1 percent next year, down from 1.6 percent predicted for 2008, according to economists' estimates compiled by Bloomberg News.
Emerging Markets
The MSCI Emerging Markets Index slumped 4 percent as stocks in Russia, the world's second-biggest oil producer, sent the Micex down 9.4 percent. The Dubai Financial Market General Index fell 7.3 percent to the lowest in almost four years, led by developers.
China's CSI Index slipped 1.1 percent, as export growth cooled to 19.2 percent in October from a year earlier. That compares with 21.5 percent in September.
Taylor Wimpey, battling to survive the biggest homebuilding slump in 25 years, sank 11 percent to 11.75 pence after orders fell 40 percent as it continues to negotiate new loan conditions with lenders.
The U.K.'s largest homebuilder has an order book of 6,607 homes, compared with 11,074 units this time last year.
U.K. home sales tumbled in October to the lowest in at least three decades, with prices falling for a 15th month, the Royal Institution of Chartered Surveyors said.
Citizen lost 9.5 percent to 504 yen in Tokyo. The company slashed its net income forecast for the year ending in March due to a worsening overseas sales outlook for wristwatches and mobile phone components.
Starbucks, Baer
Starbucks fell 6.1 percent to $9.58 after saying 2009 earnings per share may be as low as 71 cents or as high as 90 cents, depending on how steeply sales deteriorate. In July it forecast earnings per share of 90 cents to $1. Analysts had estimated 87 cents.
Financial stocks fell as Julius Baer said assets under management declined, Erste sought backing to raise capital from shareholders and Goldman Sachs Group Inc. downgraded U.S. life insurers on concern they may need more capital and their credit ratings may fall.
Julius Baer retreated 5.9 percent to 41.40 francs after Switzerland's biggest independent wealth manager said assets under management fell in the year to date as markets eroded the value of portfolios and its hedge funds businesses recorded net outflows.
Erste, Swiss Life
Erste, Austria's biggest publicly traded lender, lost 6.7 percent to 18.19 after saying it will seek shareholder approval to raise 2.7 billion euros ($3.4 billion) by issuing participation certificates, opening the bank's proposed government rescue to investors.
Allianz SE, Europe's largest insurer, dropped 6.4 percent to 61 euros. Swiss Life Holding, Switzerland's biggest life insurer, slumped 8 percent to 109.2 francs.
Banco Bilbao Vizcaya Argentaria SA dropped 6.3 percent to 8.80 euros after Merrill Lynch & Co. downgraded Spain's second- largest bank to ``underperform'' from ``neutral,'' saying the lender's Mexican business will be affected by the global credit crisis.
Intesa Sanpaolo SpA fell 9.1 percent to 2.75 euros. Italy's second-biggest bank canceled its cash dividend after third- quarter profit declined 54 percent to 673 million euros on lower income from trading and fees.
BHP, the world's largest mining company, retreated 6 percent to 1,056 pence as copper declined in Asia on slowing demand concerns. Rio Tinto Group, the third-biggest mining company, lost 5.3 percent to 2,694 pence.
Demand Outlook
Total SA, Europe's third-largest oil company, fell 3 percent to 41.30 euros as crude oil slumped as much as 5 percent to $59.32 in New York. Royal Dutch Shell Plc, the region's biggest oil company, lost 2.4 percent to 1,657 pence.
The International Energy Agency may cut its 2009 oil demand forecast for a third month as the threat of the worst recession since World War II saps fuel consumption, former IEA analysts said.
InterContinental Hotels Group Plc fell 6.2 percent to 506.5 pence. The owner of the Holiday Inn brand reported a 28 percent drop in third-quarter profit after selling properties and said October sales slowed on a ``sharp deterioration'' in the lodging market.
Cookson Group Plc sank 16 percent to 144.5 pence after the world's biggest maker of molds for steelmakers said it will miss targets as metal makers cut production to counter slowing demand.
Vodafone Group Plc rose 8.2 percent to 117.15 pence after the world's largest mobile-phone company reiterated its full- year forecast for adjusted operating profit of 11 billion pounds to 11.5 billion pounds and raised its predictions for free cash flow in the full year.
To contact the reporter on this story: Sarah Jones in London at sjones35@bloomberg.net.
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