By Adam Haigh
Dec. 5 (Bloomberg) -- European stocks slumped for a third day this week and U.S. index futures tumbled after employers in the U.S. cut jobs last month at the fastest pace in 34 years, signaling the world’s largest economy is slipping deeper into recession.
JPMorgan Chase & Co. and General Electric Co. dropped more than 3 percent after job losses in the U.S. topped forecasts and the unemployment rate jumped. BHP Billiton Ltd. tumbled 7.7 percent as copper slipped for a seventh day, its longest losing streak in 10 years. BP Plc and Total SA sank more than 5 percent as crude dropped below $43 a barrel, heading for its worst week since March 2003.
“The concern is depression,” said Patrick Sumner, a London-based portfolio manager at Henderson Global Investors, which has about $77.2 billion in assets under management. The situation will get worse “if the deterioration in the economy is sustained,” he told Bloomberg Television.
The Dow Jones Stoxx 600 Index lost 2.9 percent to 191.62 at 2:03 p.m. in London, with all 19 industry groups decreasing except for health care. Futures on the Standard & Poor’s 500 Index slipped 1.8 percent. U.S. stocks fell yesterday, pushed down by concern General Motors Corp. may file for bankruptcy and Merrill Lynch & Co.’s prediction that oil will hit $25 a barrel.
Europe’s Stoxx 600 has slumped 7.1 percent this week, wiping off about half of last week’s record gain, as reports signaled the global economy is deteriorating. The European Central Bank cut its benchmark interest rate yesterday by the most in the bank’s 10- year history after record declines in European and Chinese manufacturing and more job losses in the U.S.
Unemployment Climbs
In the U.S., payrolls shrank by 533,000 workers last month, the biggest loss since December 1974, after decreasing a revised 320,000 the prior month, the Labor Department said today in Washington. November’s job losses exceeded all estimates in a Bloomberg News survey of 73 economists. The jobless rate rose to 6.7 percent, the highest level since 1993.
Canadian employment fell by the most since 1982 in November, led by manufacturing, a sign the world’s eighth- largest economy is falling victim to a global recession.
The German economy, Europe’s largest, will shrink the most in 16 years in 2009 as the global recession hits exports, the Bundesbank said today.
“There is a vice-like grip on the market,” said Manus Cranny, a London-based equity market analyst at MF Global. “We have given up any ideas of an optimistic view” for stocks, he told Bloomberg Television.
Debt Losses
More than $31 trillion has been erased from the value of global equities this year as the U.S. mortgage market collapse, freezing credit and pushing the U.S., Japan, Germany and the U.K. into recessions. Debt losses and writedowns by the world’s largest lenders and insurers have approached $1 trillion in the worst financial crisis since the Great Depression.
National benchmarks fell in all 18 western European markets except Iceland and Ireland. The FTSE 100 lost 1.1 percent, as Royal Dutch Shell Plc and Antofagasta Plc retreated. France’s CAC 40 declined 2.7 percent, while Germany’s DAX decreased 2.5 percent.
Stocks in Europe may fall another 20 percent in the “short term” as investors grasp the possibility of deflation, Goldman Sachs Group Inc. said in a note dated today.
“Remain defensive,” strategists including Jessica Binder wrote in the report. “The start of 2009 is unlikely to bring a change in the dynamic of growth.”
Weaker Demand
The personal and household goods industry was downgraded to “underweight” from “neutral” by the brokerage, which cited weaker consumer demand. Basic-resource shares were lowered to “neutral” from “overweight” on expectations of cuts to capital expenditure and dividends.
BHP, the world’s largest mining company, fell 7.7 percent to 978.5 pence. Antofagasta, the copper producer controlled by Chile’s Luksic family, lost 5.9 percent to 365.25 pence.
Copper lost 4.3 percent today to $3,130 a metric ton in London. The metal for delivery in three months has fallen 17 percent in seven trading sessions on concern producers haven’t cut output enough to counter demand weakness in China and the U.S., the largest consumers of industrial metals.
BP, Europe’s second-largest oil producer, lost 5.5 percent to 483.75 pence. Shell, the region’s biggest, declined 4.6 percent to 1,584 pence, while Total, the third-largest energy company, retreated 6.8 percent to 36.48 euros.
Oil fell to the lowest in almost four years as the economic contraction and job losses in the U.S. cause a slump in fuel demand. Crude sank 97 cents, or 2.2 percent, to $42.70, following yesterday’s 6.7 percent decline.
TNT, Berkeley
TNT NV, Europe’s second-biggest express-delivery company, fell 4.6 percent to 14.27 euros. Deutsche Bank AG lowered its recommendation on the shares to “sell” from “hold” and reduced its price estimate 20 percent to 12 euros. The broker said an investor day yesterday highlighted how express volumes had declined significantly and look set to continue into 2009, London-based analyst Andy Chu wrote in a note to clients.
Berkeley Group Holdings Plc advanced 3.8 percent to 818.5 pence after the U.K.’s largest homebuilder by market value eliminated its debt and built up cash even as a housing slump cut first-half profit.
To contact the reporter on this story: Adam Haigh in London at ahaigh1@bloomberg.net
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