By Adam Haigh
Dec. 3 (Bloomberg) -- European stocks fell, led by technology shares, as concern earnings will deteriorate further overshadowed speculation government efforts will stem the economic slump. U.S. index futures declined before a report that will probably show a deepening contraction in services.
Infineon Technologies AG, Europe’s second-largest maker of semiconductors, sank 22 percent after reporting a wider-than- expected net loss. ASML Holding NV decreased 4.1 percent. Stagecoach Group Plc slumped 4.7 percent after the owner of Britain’s biggest rail franchise forecast tough times.
Europe’s Dow Jones Stoxx 600 Index lost 0.7 percent to 195.74 at 8:04 a.m. in London, extending this year’s retreat to 46 percent. More than $32 trillion has been erased from the value of global equities as the collapse of the U.S. mortgage market sparked financial turmoil that pushed economies into recession.
“Everybody has been surprised by the scale of this mess and it is going to get worse,” said Hans Goetti, who oversees $10 billion as chief investment officer at LGT Bank in Liechtenstein (Singapore) Ltd., part of the bank for the wealthy owned by Liechtenstein’s royal family. “We may see this downturn lasting well into 2010.” Goetti is underweight global equities.
Services Shrinking
Standard & Poor’s 500 Index futures slipped 1 percent. Service industries shrank in November at the fastest pace on record, sinking the economy deeper into what may become the worst recession in decades, economists said before today’s report.
Separately, an ADP Employer Services report may show companies cut an estimated 205,000 jobs in November, the most since the 2001 recession, according to the median average of a economists surveyed by Bloomberg.
The S&P 500 may jump to 1,300 by the end of 2009, a 53 percent rally from its current level, New York-based UBS AG strategist David Bianco wrote in a report dated yesterday. Stocks in the U.S. and Europe will withstand a “full-blown” global recession, he said.
U.S. stocks rallied yesterday, rebounding from the market’s worst tumble since October, after General Electric Co. announced plans to maintain its dividend and the Federal Reserve extended terms of three emergency loan programs.
The three loan facilities, part of the central bank’s efforts to cushion financial markets from the worst crisis in seven decades, had about $304 billion in loans outstanding as of last week. They will be extended to April 30 from January 30.
Bankruptcy ‘Not an Option’
U.S. House Speaker Nancy Pelosi yesterday said she believes either Congress or the Bush administration will step in to aid domestic automakers because bankruptcy is “not an option.”
In the U.K., consumer confidence deteriorated in November to the weakest in at least four years as unemployment jumped and banks curtailed credit, Nationwide Building Society said.
In efforts to curb the slowing economy, economists predict European Central Bank policy makers will cut their benchmark interest rate by a half percentage point this week. The Bank of England will probably lower its key rate by 1 percentage point, according to a Bloomberg survey. Both central banks are scheduled to announce their decisions tomorrow.
Infineon declined 22 percent to 1.285 euros after saying it sees full-year 2009 sales down at least 15 percent from this year and reported a 763 euros fourth-quarter net loss, missing analysts’ estimates for a 321 million loss.
ASML, Europe’s largest maker of semiconductor equipment, lost 4.1 percent to 10.685 euros.
Stagecoach fell 4.7 percent to 163.5 pence after the owner of the U.K.’s biggest rail franchise forecast tougher economic times ahead.
Telecom Italia SpA rose 1.2 percent to 1.054 euros after Italy’s largest phone company predicted revenue, excluding currency moves and acquisitions or disposals, would rise 1 percent to 2 percent in 2009. It also reiterated a pledge to keep cutting debt.
BHP, EDF
BHP Billiton Ltd., the world’s biggest mining company, gained 2.5 percent to 1,062 pence after Citigroup Inc. raised its recommendation on the shares to “buy” from “hold.”
BHP’s decision to walk away from the Rio Tinto Group acquisition was “prudent,” London-based analyst Heath Jansen wrote in a note to clients. “It is ultimately positive for shareholders given options that a strong balance sheet present in the current highly unstable economic environment.”
Electricite de France SA slumped 5.6 percent to 42.06 euros. The world’s biggest operator of nuclear reactors bid $4.5 billion for half of Constellation Energy Group Inc.’s nuclear power business. Constellation agreed earlier this year to be bought by Berkshire Hathaway Inc.’s MidAmerican Energy Holdings Co. for $4.7 billion.
To contact the reporter on this story: Adam Haigh in London at ahaigh1@bloomberg.net
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