Stocks in Europe, Asia Decline, Led by Banks; U.S. Futures Fall

By Adam Haigh

Nov. 18 (Bloomberg) -- Stocks in Europe and Asia declined for a second day, led by commodity producers and financial companies on concern the deepening recession will erode profits. U.S. index futures fell.

BNP Paribas SA, France's biggest bank, and Credit Suisse Group AG slumped more than 6 percent. BHP Billiton Ltd. dropped 3.3 percent as Macquarie Group Ltd. cut its 2009 profit forecast for the world's largest mining company by 31 percent. Wellstream Holdings Plc, the U.K. oil-services company, sank 25 percent after saying it's ``more cautious'' on its 2009 outlook.

The MSCI World Index lost 0.9 percent to 851.45 at 12:10 p.m. in London with nine of the 10 industry groups in the index decreasing. The MSCI Emerging Markets Index slipped 3.3 percent, sliding to a three-week low, led by Russia's OAO Gazprom and Jiangxi Copper Co. of China.

``Growth is still going to deteriorate,'' said Lucy MacDonald, chief investment officer of global equities at RCM UK Ltd., which has $100 billion under management. ``We've seen a big de-rating and we're seeing the earnings come down to match that.''

Europe's Dow Jones Stoxx 600 Index retreated 1.7 percent. ERG SpA declined as Morgan Stanley recommended selling Italy's biggest exporter of oil products, and Burberry Group Plc dropped after the retailer slashed its forecast. The MSCI Asia Pacific Index slipped 3 percent.

Futures on the Standard & Poor's 500 Index fell 1.6 percent. The S&P 500 is poised to extend this year's 42 percent decline after a rally from last week's five-year low lasted just one day, say analysts who study charts of trading patterns.

Emerging Markets

Losses in emerging markets were bigger than developed nations today as increasing signs the credit crisis will drag down the global economy weighed on commodity prices. China's CSI 300 Index tumbled 7.3 percent, and Russia's RTS Index sank 5 percent, with basic-resources stocks leading declines.

More than $31 trillion has been erased from the value of global equity markets as writedowns and credit losses topped $965 billion in the worst financial crisis since the Great Depression.

U.S. Treasury Secretary Henry Paulson and two of President- elect Barack Obama's top economic advisers agreed that more steps are needed to shore up the economy.

``There's still a good bit to be done because the economy has turned down,'' Paulson said at a conference late yesterday in Washington.

Lawrence Summers, a former Treasury chief who's a candidate to hold the post again, called for a two- to three-year fiscal stimulus. Robert Rubin, Summers's predecessor under Bill Clinton, said a ``very substantial'' package is needed.

Profit Outlook

Earnings for the 1,817 companies in western Europe that reported results since Oct. 7 declined 9.9 percent on average, trailing expectations by 6 percent, Bloomberg data show. Profit for the 445 companies in the S&P 500 that posted results in the same period shrank 17 percent, falling short of analysts estimates by 4.4 percent, the data show.

BNP Paribas dropped 9.6 percent to 38.905 euros. Credit Suisse, the second-largest Swiss bank, sank 6.3 percent to 28.72 francs. HSBC Holdings Plc, Europe's biggest bank by market value, slid 5 percent to 673 pence.

The cost of protecting bank bonds from default rose to the highest in almost a month as prices of mortgage-linked securities tumble.

BlackRock Inc., the largest publicly traded asset manager in the U.S., is cutting jobs for the first time in its 20-year history, following Citigroup Inc.'s announcement yesterday to slash more than 50,000 from its workforce. Dismissal notices will be issued this week, BlackRock said yesterday in a memo. Banks and brokerages have cut as many as 166,000 jobs since the subprime-mortgage market's collapse last year.

Commodities Drop

BHP Billiton slid 3.3 percent to 843 pence after Macquarie Group cut its 2009 profit forecast by 31 percent. Rio Tinto Group, the third biggest, declined 4.8 percent to 2,341 pence.

Copper lost 1.3 percent in London, falling for a second day in a row. Nickel and tin also declined.

Jiangxi Copper, China's second-biggest producer of the metal, plunged 10 percent to 10.72 yuan. Zijin Mining Group Co., the country's No. 1 gold producer, lost 9.9 percent to 3.72 yuan.

A report today may show prices paid to U.S. producers slipped in October by the most on record as weakening global growth caused demand for commodities to dry up.

Wellstream tumbled a record 25 percent to 379.75 pence after the company said that while the backlog ``remains at historically high levels, a degree of market uncertainty has been introduced by general market conditions and recent oil price movements, particularly with regard to the potential for project delays.''

ERG, Burberry

ERG slipped 4.8 percent to 11.24 euros. Morgan Stanley assumed coverage with an ``underweight'' recommendation and a price estimate of 10.40 euros on the shares.

Burberry, the London-based luxury goods company, slid 8.5 percent to 183.25 pence after saying pretax earnings may be at the ``mid to lower'' end of analysts' projections in the current fiscal year.

Carphone Warehouse Group Plc slumped 18 percent to 107.215 pence. Europe's largest mobile-phone retailer said it won't sell the TalkTalk Internet unit as it considers splitting into two listed companies.

Alcatel-Lucent SA jumped 4.1 percent to 1.89 euros. Dassault Aviation offered 1.56 billion euros ($2 billion) for Alcatel-Lucent's 20.8 percent stake in Thales SA.

To contact the reporter on this story: Adam Haigh in London at ahaigh1@bloomberg.net