By Sarah Jones
Dec. 10 (Bloomberg) -- European stocks swung between gains and losses as lower earnings forecasts from Electronic Arts Inc. and Praxair Inc. weighed on media and chemical companies, offsetting gains in commodity producers.
Vivendi SA, which owns more than half of Activision Blizzard Inc., dropped 2.5 percent after rival Electronic Arts reduced its revenue and profit outlook. Air Liquide SA lost 4.1 percent as Praxair, the largest producer of industrial gases in the Americas, trimmed its earnings forecast. Rio Tinto Group jumped 16 percent on plans to cut jobs and slash spending next year. General Motors Corp. rose 4.7 percent in early New York trading, lifting U.S. futures on speculation lawmakers will approve a $15 billion government bailout of the automobile industry.
Europe’s Dow Jones Stoxx 600 Index slipped less than 0.1 percent to 205.35 at 1:41 p.m. in London after earlier climbing as much as 0.5 percent and dropping as much as 1.1 percent.
“Stocks are more concentrated on the bad news, such as profit warnings,” Clemence Bounaix, who helps oversee about $5.2 billion as fund manager at KBL Richelieu Gestion, said in a Bloomberg Television interview. “The situation remains very difficult.”
The Stoxx 600 has slumped 44 percent this year as policy makers and governments worldwide introduce measures to cushion economies from the worst financial crisis since the Great Depression. More than $31 trillion has been erased from the value of global equities and credit losses and writedowns at banks and insurers are approaching $1 trillion.
Asia, U.S.
The MSCI Asia Pacific Index climbed 3.3 percent, led by a rally in carmakers including Honda Motor Co. and Hyundai Motor Co., while futures on the Standard & Poor’s 500 Index expiring this month added 1.2 percent.
The U.K. economy may contract at the fastest pace since 1990 in the current quarter as the recession intensifies, the National Institute for Economic and Social Research said today.
Analysts expect full-year earnings at companies in the Stoxx 600 to fall 13 percent this year, compared with 11 percent growth predicted in January, according to Bloomberg data. Profits in the S&P 500 may drop 9.5 percent on average in 2008.
Vivendi dropped 2.5 percent to 22.33 euros. France’s biggest media company owns 54 percent of Activision Blizzard, the world’s largest video-game publisher. Game Group Plc, the U.K.’s biggest video-games retailer, fell 5.9 percent to 124.75 pence.
Electronic Arts, the second-largest maker of video games, said yesterday after U.S. markets closed that 2009 revenue and profit will be less than forecast because of slow holiday sales in North America and Europe. The stock dropped as much as 8.1 percent to $17.79 in German trading.
Chemical Makers
Air Liquide, the largest maker of industrial gases, sank 4.1 percent to 62.63 euros. Linde AG, the second-biggest, retreated 4.3 percent to 55.89 euros.
Praxair trimmed its fourth-quarter earnings forecast and said it will cut 1,600 jobs because the recession is causing an “unprecedented” drop in demand. Profit in the quarter will be 95 cents to $1 a share, excluding one-time costs. That compares to an earlier forecast of $1.03 to $1.08 a share.
GM, the biggest U.S. automaker, climbed 4.7 percent to $4.92 in early New York trading as Congress prepares to vote on the plan Democrats reached with the Bush administration to rescue General Motors Corp. and Chrysler LLC.
The tentative agreement calls for the appointment of a so- called car czar who could force General Motors and Chrysler into Chapter 11 bankruptcy if the companies don’t come up with a restructuring plan by March 31, according to a senior Bush administration official who requested anonymity.
Honda Motor, Japan’s second-biggest automaker, rallied 10 percent to 2,035 yen. Hyundai Motor, South Korea’s largest carmaker, gained 9.2 percent to 47,050 won.
Basic Resources
Rio Tinto surged 16 percent to 1,458 pence after the world’s third-biggest mining company said it will eliminate 14,000 jobs and slash spending to reduce debt as the global recession curbs demand for metals. The company plans to reduce net debt by $10 billion by the end of 2009 from $38.9 billion and said it will sell “significant assets.” Rio Tinto also plans to hold its 2008 dividend at the 2007 level of $1.36 a share.
Copper, lead, nickel and tin all advanced on the London Metal Exchange on expectations that declines in the dollar may boost demand for industrial metals.
BHP Billiton Ltd., the world’s biggest mining company, increased 5.5 percent to 1,220 pence. Xstrata Plc, the fourth- largest copper producer, added 5.9 percent to 689.5 pence.
Marks & Spencer Group Plc let U.K. retailers lower after Morgan Stanley said sales during Christmas could be the “worst in many years.” The U.K.’s largest clothing retailer fell 5 percent to 231.25 pence, while Kesa Electricals Plc declined 4.8 percent to 100 pence.
Morgan Stanley said the two companies are “most likely to disappoint” this Christmas as earnings come under pressure from lower sales and increased discounting.
To contact the reporter on this story: Sarah Jones in London at sjones35@bloomberg.net.
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