By Adria Cimino
Dec. 19 (Bloomberg) -- Stocks in Europe and Asia declined, led by commodity producers, on concern the deteriorating global economy will sap demand for metals and oil. U.S. futures fell.
BP Plc, Europe’s second-largest oil company by market value, and Total SA sank at least 4 percent as crude headed for its second-biggest weekly drop in more than five years. Cnooc Ltd., China’s largest offshore oil producer, slumped 4.9 percent. BHP Billiton Ltd., the world’s biggest mining company, retreated 8.7 percent on lower metals prices. Palm Inc. plunged 9.5 percent in Europe after reporting a sixth straight loss. UBS AG led banks lower as Standard & Poor’s cut ratings and changed outlooks for 12 U.S. and European financial institutions.
The Dow Jones Stoxx 600 Index decreased 1.7 percent to 194.05 at 12:25 p.m. in London, extending the weekly drop to 2.1 percent. The MSCI Asia Pacific Index slipped 0.8 percent. Futures on the Standard & Poor’s 500 Index sank 1 percent, indicating the measure may decline for a third straight day.
“You could see as we go into January further oil price weakness,” said Bob Parker, vice chairman of Credit Suisse Asset Management in London, which oversees about $600 billion. “First- quarter corporate earnings growth numbers are going to be bad. We could easily see global earnings growth down 30 to 40 percent,” he told Bloomberg Television.
Trading may be more volatile than usual today as options and futures expire across Europe.
The Stoxx 600 has slumped 47 percent in 2008 as credit losses and writedowns at the world’s largest banks surpassed $1 trillion and the U.S., Europe and Japan entered the first simultaneous recessions since World War II.
‘Worrisome’
“It’s not far from the worst year in a century for stocks,” said Romain Boscher, a fund manager at Groupama Asset Management in Paris, which oversees about $17 billion in stocks. “Rather than only a stock market crisis, it’s an economic and a financial crisis too -- That’s what’s worrisome,” he told Bloomberg Television.
France’s economy, the second largest of the 15 countries sharing the euro, will contract by the most since 1974 this quarter and slip into a recession early next year, the national statistics office Insee forecast.
German producer prices dropped the most since records began in 1949 in November as the cost of oil declined and the global economic slowdown curbed demand. Producer prices fell 1.5 percent from October when they were unchanged, the Federal Statistics Office in Wiesbaden said.
Oil, Metals
Basic-resource shares and oil stocks were the worst performers among 19 groups in the Stoxx 600, with measures for the industries losing 7.9 percent and 4.3 percent, respectively.
BP slid 6.3 percent to 491.25 pence. Total, Europe’s third- largest oil company, retreated 4.6 percent to 38.42 euros.
Crude traded below $36 a barrel in New York as a deepening global recession saps demand, countering efforts by OPEC to boost prices. The contract for January delivery has fallen 26 percent this week, slumping 9.6 percent yesterday.
Cnooc dropped 4.9 percent to HK$7.21. Inpex Corp., Japan’s largest oil explorer, lost 5.9 percent to 586,000 yen.
BHP tumbled 8.7 percent to 1,149 pence, while Rio Tinto Group, the world’s third-biggest mining company, sank 10 percent to 1,372 pence. Newmont Mining Corp., the largest U.S. gold producer, slipped 1.3 percent to $36.70 in trading before the U.S. stock market opened.
Copper is on course for an 9.3 percent weekly drop in London. A Bloomberg News survey showed the metal may decline next week as demand from the housing industry slumps in the U.S., the second-biggest buyer of the metal used in wires and pipes.
Lowered Forecasts
Nickel and copper forecasts for 2009 were slashed by Troika Dialog, a Moscow-based bank, citing an “extreme deceleration of global growth.”
UBS cut its recommendations for Anglo American Plc, Antofagasta Plc and Xstrata Plc to “neutral” from “buy.”
Anglo American, the world’s fourth-largest diversified mining company, lost 12 percent to 1,396 pence. Xstrata, Europe’s largest zinc producer, sank 14 percent to 626 pence and Antofagasta, the copper producer controlled by Chile’s Luksic family, dropped 12 percent to 372.25 pence.
Palm slid 9.5 percent to $1.99 in Germany. The company reported a sixth straight quarterly loss after taxes rose and its Treo and Centro phones faced mounting competition Research In Motion Ltd.’s BlackBerry and Apple Inc.’s iPhone.
Earnings for S&P 500 companies are expected to fall about 14 percent this year, compared with 6.6 percent growth forecast six months ago, data compiled by Bloomberg show. Stoxx 600 profits are estimated to decline 16 percent on average, compared with a June projection for a 0.5 percent drop, according to the data.
‘Bank Industry Risk’
UBS, Switzerland’s biggest bank, sank 3.6 percent to 14.12 Swiss francs. Royal Bank of Scotland Group Plc, 58 percent owned by the U.K. government after a bailout, fell 9.9 percent to 41.9 pence. Ratings for both banks were cut to A+ from AA- by S&P.
“The downgrades and revised outlooks reflect our view of the significant pressure on large complex financial institutions’ future performance due to increasing bank industry risk and the deepening global economic slowdown,” S&P said in a statement.
Citigroup Inc., the U.S. bank that got $65 billion in government funds to replenish capital after four straight quarterly losses, had its senior debt rating reduced two grades by Moody’s Investors Service, the first downgrade in a year.
ABB Ltd. dropped 5.1 percent to 15.19 Swiss francs. The world’s largest builder of electricity networks said it will book pretax provisions of $850 million for potential costs related to investigations into alleged anti-competitive practices in the U.S. and Europe.
Stada Arzneimittel AG retreated 3.5 percent to 18.88 euros. Germany’s third-largest generic-drug maker said profit may fall this year after it lost a patent dispute linked to the olanzapin medicine used to treat mental illness.
To contact the reporter on this story: Adria Cimino in Paris at acimino1@bloomberg.net.
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