European Stocks, U.S. Index Futures Fall; Infineon, ASML Drop

By Adam Haigh

Dec. 3 (Bloomberg) -- Stocks fell in Europe and U.S. index futures dropped on disappointing earnings from Infineon Technologies AG and Research In Motion Ltd., a record contraction in European services and higher-than-forecast job cuts in America.

Infineon, Europe’s second-largest maker of semiconductors, tumbled 29 percent on a wider-than-expected net loss. ASML Holding NV and Nokia Oyj sank more than 3 percent. Research In Motion, whose BlackBerry competes against Apple Inc.’s iPhone, declined 7.9 percent after third-quarter profit missed its forecast.

Europe’s Dow Jones Stoxx 600 Index lost 2.3 percent to 192.66 at 2:13 p.m. in London, extending this year’s retreat to 47 percent. More than $31 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.

Standard & Poor’s 500 Index futures slipped 2.6 percent before a report that will probably show service industries shrank in November at the fastest pace on record, sending the world’s largest economy deeper into what may become the worst recession in decades. Futures on the Dow Jones Industrial Average fell 2.3 percent.

The 30-company Dow average has swung by an average of 517 points between intraday highs and lows over the last two months, and the 20-day average exceeded a record 600 points in October.

Job Cuts

European stocks and U.S. index futures extended declines after the ADP Employer Services report indicated that American companies cut a more-than-forecast 250,000 jobs in November, the most since 2001. Economists predicted a decline of 205,000 jobs, according to a Bloomberg survey.

The MSCI Asia Pacific Index gained 1.3 percent as GST Holdings Ltd., a Chinese fire-alarm maker, and China Mobile Ltd. rallied.

Stocks worldwide will withstand a “full-blown” global recession, according to UBS AG. 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 strategist David Bianco wrote in a report dated Dec. 2.

U.S. stocks climbed 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. GE jumped 14 percent, while Wells Fargo & Co., Bank of America Corp. and JPMorgan Chase & Co. advanced at least 9 percent.

Bankruptcy ‘Not an Option’

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.”

National benchmarks slid in 16 of the 18 western European markets. The FTSE 100 lost 1.8 percent, as Stagecoach Group Plc slipped after forecasting tough times ahead. France’s CAC 40 dropped 2.9 percent, led by Electricite de France SA after it bid $4.5 billion for half of Constellation Energy Group Inc.’s nuclear power business. Germany’s DAX slid 2.8 percent.

European services shrank at a record pace and retail sales fell more than forecast in October, reports today showed. In the U.K., services contracted at the fastest pace in at least 12 years in November, and consumer confidence dropped.

The reports bolstered the case for interest-rate cuts. Economists predict European Central Bank policy makers will lower their benchmark rate by a half percentage point, and the Bank of England will probably slash its key rate by 1 percentage point. Both central banks are due to announce decisions tomorrow.

Bigger Cut

HSBC Holdings Plc said it now forecasts the ECB cutting the rate by 0.75 percentage points, having previously estimated a 0.5 percentage point decrease.

Infineon declined 29 percent to 1.17 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-euro loss.

ASML, Europe’s largest maker of semiconductor equipment, lost 3.1 percent to 10.80 euros. Nokia, the world’s biggest maker of mobile phones, declined 3.2 percent to 10.53 euros.

Research In Motion sank 7.9 percent to $34.38 in pre-market trading in New York. Profit rose to no more than 83 cents a share in the quarter ended Nov. 29, missing a company forecast of as much as 97 cents. The results were preliminary, with the full financial report due on Dec. 18.

Stagecoach fell 18 percent to 140.9 pence after the owner of the U.K.’s biggest rail franchise said it may cut jobs as the slowdown begins to threaten passenger numbers.

Pressure on Margins

Bouygues SA fell 9.5 percent to 28.815 euros after signaling orders and building margins may decrease next year. The world’s second-largest construction company is already seeing “pressure” on profit margins at road-building unit Colas and predicts fewer orders and a similar squeeze on new civil-works contracts, the Chief Financial Officer Philippe Marien said yesterday during a conference call on the company’s third-quarter earnings.

Analysts have slashed earnings estimates this year as economies from Germany and the U.K. to the U.S. slip into recession. Profit for companies in the Stoxx 600 will slide 13 percent in 2008, compared with 11 percent growth forecast at the start of the year, according to Bloomberg data. Earnings for S&P 500 companies will slide 11 percent in 2008, the data show.

Since Oct. 7, quarterly earnings for the 329 companies in the Stoxx 600 that reported results declined 15 percent on average, trailing expectations by 6 percent, Bloomberg data show. For the 465 companies in the S&P500 that have reported results, earnings sank 17 percent and missed estimates by 4.2 percent, the data show.

Thwarting Buffett

EDF slumped 5.4 percent to 42.175 euros after the world’s biggest operator of nuclear reactors bid for half of Constellation’s nuclear business to expand in the U.S. and thwart a rival bid from billionaire Warren Buffett. Constellation agreed earlier this year to be bought by Berkshire Hathaway Inc.’s MidAmerican Energy Holdings Co. for $4.7 billion.

GST surged 38 percent to HK$2.62 after United Technologies Corp. offered to buy the remaining 71 percent of the company it doesn’t already own for HK$1.9 billion ($245 million). The stock resumed trading today after being suspended since Nove. 10.

China Mobile climbed 3.2 percent to HK$72.55. State radio said the country will invest a total of 800 billion yuan ($116 billion) to provide 3G mobile services, and issue three licenses by the end of the year.

To contact the reporter on this story: Adam Haigh in London at ahaigh1@bloomberg.net