European, U.S. Stock Futures Slump as Auto Bailout Plan Fails

By Adam Haigh

Dec. 12 (Bloomberg) -- European and U.S. stock-index futures tumbled as the Senate’s rejection of a $14 billion rescue package for American automakers threatened to deepen the global economic slump. Treasuries rose, while the dollar slid.

Bayerische Motoren Werke AG and Daimler AG may drop on concern the failure of General Motors Corp. and Chrysler LLC would hurt suppliers that also serve European automakers. Treasury note yields dropped to record lows, while the dollar headed for its biggest weekly loss against the euro in eight years and slumped below 90 yen as the Senate vote fell short of the 60 required to pass the plan.

“When something like this news hits the streets, all the good news is gone,” said Nicole Sze, a Singapore-based investment analyst at Bank Julius Baer & Co., which manages $350 billion. “Given the concerns over the job losses if the auto industry were to collapse, and if the rescue fails, it will send a big dampening effect to investor sentiment.”

Futures on the Dow Jones Euro Stoxx 50 Index, a benchmark for the euro region, lost 117, or 4.7 percent, to 2,369 at 7:42 a.m. in London. Standard & Poor’s 500 Index futures expiring in March slid 4.1 percent. The U.K.’s FTSE 100 Index is set to open 151 points lower, according to IG Markets. The MSCI Asia Pacific Index lost 3.4 percent.

The MSCI World Index has dropped 44 percent this year, on course for its worst annual retreat on record as writedowns and credit losses neared $1 trillion amid the worsening financial crisis. A failure of GM and Chrysler would threaten millions of jobs in the U.S., where initial jobless claims jumped to a 26- year high last week.

Daimler, BMW

Daimler sank as much as 8.6 percent to 22.96 euros in pre- market trading at Germany’s Lang & Schwarz Wertpapierhandelsbank AG and BMW fell as much as 5.7 percent to 21.15 euros.

The U.S. is the No. 1 market for BMW and the second-biggest for Daimler’s Mercedes-Benz. Both carmakers have factories there, and while they and other German brands control about 7 percent of the American market, they compete more with each other than with GM and Ford Motor Co.

The yield on the 10-year note slipped 11 basis points, or 0.11 percentage point, to 2.50 percent as of 2:41 p.m. in Tokyo, according to BGCantor Market Data. The U.S. currency weakened to 88.53 yen, the lowest since Aug. 2, 1995, before trading at 89.50 yen in London from 91.45 yen late yesterday in New York.

The Senate rejected the legislation yesterday after the bill passed the House on Dec. 10.

HBOS Plc, the U.K. bank being bought by Lloyds TSB Group Plc, may drop after saying it will take a 3.3 billion-pound ($4.9 billion) impairment charge as credit conditions deteriorate.

Alcatel-Lucent SA might be active. The world’s largest supplier of fixed-line telephone networks said it plans to cut 1,000 managerial jobs and reduce expenses by 1 billion euros ($1.3 billion) in each of the next two years as Chief Executive Officer Ben Verwaayen tries to end seven quarters of losses.

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