European Stocks Fall on Economy Concerns; BP, Shell, TNT Drop

By Adam Haigh

Dec. 5 (Bloomberg) -- European stocks fell, extending this week’s decline, as oil traded near a four-year low and investors speculated a report will show U.S. employers cut jobs last month at the fastest pace in a quarter century.

BP Plc and Total SA declined more than 3 percent after crude dropped below $44 a barrel. BHP Billiton Ltd. slipped 4.3 percent as copper retreated for a seventh day. TNT NV, Europe’s second-biggest express-delivery company, slumped 2.8 percent as Deutsche Bank AG recommended selling the stock.

The Dow Jones Stoxx 600 Index lost 1.4 percent to 194.58 at 8:05 a.m., with all 19 industry groups decreasing. The index has fallen 5.7 percent this week, paring almost half of last week’s record advance.

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. Today’s jobs report for November will probably provide the latest evidence the recession deepened in the world’s largest economy.

“We are of course focused on non-farm payrolls which is giving us a negative skew,” said Manus Cranny, a London-based equity market analyst at MF Global. “There is a vice like grip on the market. We have given up any ideas of an optimistic view,” for stocks, he told Bloomberg Television.

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 signaled the global economic slump is worsening.

Unemployment Climbs

In the U.S., payrolls shrank by 333,000 workers last month, the biggest drop since July 1982, according to the median estimate in a Bloomberg News survey. The jobless rate may have jumped to 6.8 percent, the highest level since 1993.

“The markets will be hovering until the jobless figures come out of the U.S.,” said Felix Riley, head of binaries, a type of spread-betting, at ChoiceOdds in London. “This will then dictate the direction for the rest of the day.”

BP, Europe’s second-largest oil producer, lost 3.1 percent to 495.75 pence. Royal Dutch Shell Plc, the region’s biggest, declined 2.2 percent to 1,625 pence, while Total, the third largest, retreated 3.3 percent to 37.84 euros.

Oil headed for its biggest weekly decline since March 2003, trading near a four-year low, as the economic contraction and job losses in the U.S. cause a slump in fuel demand.

Crude slumped $3.12, or 6.7 percent, to $43.67 yesterday, and traded 12 cents higher today.

BHP, TNT

BHP, the world’s largest mining company, fell 4.3 percent to 1,015. Rio Tinto Group, the third-biggest, slipped 1.5 percent.

Copper lost 2.1 percent today to $3,200 a metric ton in London. The metal for delivery in three months on the London Metal Exchange has fallen 12 percent this week.

TNT fell 2.8 percent to 14.53 euros. Deutsche Bank 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 3.3 percent to 814.5 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