European, Asia Stocks Fall on Economy, U.S. Index Futures Drop

By Michael Patterson

Dec. 1 (Bloomberg) -- Stocks in Europe and Asia fell, led by commodity producers and banks, as reports signaled the economic slump is deepening. U.S. index futures declined.

BHP Billiton Ltd., the world’s largest mining company, and Rio Tinto Group slumped more 4 percent after manufacturing in China shrank by the most on record. Barclays Plc and Lloyds TSB Group Plc slipped as industry reports showed U.K. house prices dropped to the lowest level in almost three years in November and luxury-home values in central London fell for an eighth month.

Europe’s Dow Jones Stoxx 600 Index declined 0.9 percent to 204.38 at 8:04 a.m. in London. The MSCI Asia Pacific Index lost 0.6 percent after the failure of homebuilder Morimoto Co. drove bankruptcies by listed companies to a postwar record in Japan.

Futures on the Standard & Poor’s 500 Index lost 1.1 percent before a report that may show manufacturing in the U.S. contracted in November at the fastest pace in 26 years. The S&P 500 posted the biggest rally in more than 30 years last week after the government agreed to protect Citigroup Inc. from more losses.

The National Retail Federation said 172 million U.S. shoppers went to stores and Web sites over the weekend, a 17 percent increase from a year ago and more than a forecast of 128 million. They spent an average of $372.57, up 7.2 percent from last year, according to an e-mailed survey conducted for the NRF by BIGresearch, a Worthington, Ohio-based polling firm.

Last Week’s Gain

Europe’s Stoxx 600 posted its biggest gain since January 1987 last week as investors speculated efforts by governments from Europe to the U.S. to China will help shore up the economy and stabilize markets. The index still fell 7.1 percent in November, the third straight monthly retreat, and is down 43 percent this year.

BHP Billiton declined 4.3 percent to 1,138 pence, and Rio Tinto, the world’s third-biggest mining company, slipped 5.8 percent to 1,515 pence.

Copper fell for a second day in Shanghai after China’s contraction in manufacturing signaled the growing risk of a slump in the world’s biggest consumer of the metal.

The Purchasing Managers’ Index fell to a seasonally adjusted 38.8 in November from 44.6 in October, the China Federation of Logistics and Purchasing said today in an e-mailed statement. A second PMI, released by CLSA Asia-Pacific Markets, also showed a record contraction.

Home Prices Fall

Barclays, the U.K.’s second-largest bank, dropped 4.1 percent to 162.5 pence. Lloyds TSB, which is buying HBOS Plc to become Britain’s biggest mortgage lender, declined 0.8 percent to 166.7 pence.

The average cost of a home in England and Wales fell 8.1 percent in the past 12 months to 161,400 pounds ($248,000), the lowest since January 2006, London-based Hometrack Ltd. said. Values declined 1.1 percent on the month, compared with a 1.3 percent drop in October.

The estimated average value of a house or apartment in London’s nine most expensive neighborhoods fell 3.6 percent from October, according to an index compiled by Knight Frank LLP. It was the second-largest drop since the index started in 1976.

To contact the reporter on this story: Michael Patterson in London at mpatterson10@bloomberg.net.