By Adria Cimino
Dec. 22 (Bloomberg) -- Stocks in Europe and Asia declined, extending the MSCI World Index’s worst year on record, as concern mounted the deteriorating global economy will curb earnings. U.S. index futures retreated.
Bayerische Motoren Werke AG and Renault SA sank more than 2 percent after Japan’s Toyota Motor Corp. forecast its first operating loss in 71 years on plunging North American and European car sales and a surging yen. BHP Billiton Ltd. and Rio Tinto Group fell at least 1.5 percent as UBS AG cut its profit estimates for the mining companies.
Europe’s Dow Jones Stoxx 600 Index dropped for a fourth day, sliding 1.7 percent to 193.17 at 9:14 a.m. in London. The MSCI Asia Pacific Index decreased 0.4 percent. Standard & Poor’s 500 Index futures expiring in March slipped 0.2 percent.
“There will be thin-volume volatility, so we’ll get some whipping around” this week, said Mark Tinker, who helps oversee about $13.5 billion as fund manager at Axa Framlington Ltd. in London. “Economic activity ground to a halt in October and November -- those are the statistics we’re now seeing,” he told Bloomberg Television.
The MSCI World Index has slumped 43 percent this year as credit-related losses and writedowns at financial firms topped $1 trillion and the U.S., Europe and Japan entered the first simultaneous recessions since World War II.
Analysts have slashed their earnings forecasts, predicting a 16 percent drop in full-year profits at Stoxx 600 companies, compared with 11 percent growth estimated at the start of the year. Earnings in 2009 are expected to rise 0.1 percent.
Obama Stimulus
President-elect Barack Obama is expanding his stimulus package with a goal of creating or saving 3 million jobs over two years, a transition aide said on Dec. 20. That’s revised from 2.5 million jobs he previously announced.
BMW, the world’s largest maker of luxury cars, declined 2.3 percent to 21.41 euros. Renault, France’s second-biggest automaker, retreated 2 percent to 16.90 euros. Volkswagen AG, Europe’s largest, slid 8 percent to 263.16 euros.
Toyota, the world’s second-biggest carmaker, said its loss in the year ending March will likely total 150 billion yen ($1.7 billion), compared with a previous forecast for a 600 billion yen operating profit. Toyota cut its net income forecast 91 percent to 50 billion yen.
General Motors Corp., the largest U.S. automaker, lost 3.6 percent to $4.33 in German trading. President George W. Bush announced last week that GM and Chrysler LLC will get $13.4 billion in emergency government loans in exchange for substantially restructuring their businesses.
‘Situation Remains Tense’
“Carmakers are in difficulty,” Clemence Bounaix, who helps oversee about $5.6 billion as fund manager at KBL Richelieu Gestion, told Bloomberg Television. “The situation remains tense. There’s a systemic effect on the stock market.”
BHP, the world’s biggest mining company, declined 2.8 percent to 1,200 pence. Rio Tinto, the third-largest, slid 1.8 percent to 1,404 pence. UBS cut its estimates for coking coal prices as steelmakers limit output.
BHP’s profit may be $13.3 billion in the year ending June 30, 2009, 7 percent lower than previously forecast, UBS analysts led by Glyn Lawcock wrote in a Dec. 19 report. Rio’s profit may be $6 billion in the year ending Dec. 31, 2009, he said. That’s 5.6 percent lower than previously estimated.
Danske Bank A/S, the second-biggest Nordic bank, dropped 2.4 percent to 51.50 kroner. The Danish government will inject 100 billion kroner ($18.7 billion) into the banking system to help lenders overcome the credit crisis, Jyllands-Posten said, citing Finance Minister Lars Loekke Rasmussen.
Hypo Real, Infineon
Hypo Real Estate Holding AG slipped 3.7 percent to 2.89 euros as the commercial-property lender that had to be bailed out by the German government and financial institutions in October said fourth-quarter results will be hurt by restructuring costs.
Allied Irish Banks Plc jumped 21 percent to 2 euros. Ireland’s biggest lender by market value will receive 2 billion euros from the government, the finance ministry in Dublin said.
Anglo Irish Bank Corp., the country’s third-largest lender by assets, will get 1.5 billion euros and the government will control shares with 75 percent of Anglo Irish’ voting rights, the finance ministry said. Bank of Ireland Plc, the biggest bank by assets, will receive 2 billion euros from the government.
Anglo Irish added 4.3 percent to 36 cents, while Bank of Ireland surged 36 percent to 91 cents.
Infineon Technologies AG, Europe’s second-largest chipmaker, rallied 13 percent to 75 cents. The company’s Qimonda AG unit will get a loan of 325 million euros ($452 million) from the German state of Saxony, Infineon and a Portuguese bank as part of a rescue package for the distressed German memory-chip maker.
Deutsche Bank AG analysts upgraded Infineon shares to “hold” from “sell.”
To contact the reporter on this story: Adria Cimino in Paris at acimino1@bloomberg.net.
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