European Stock-Index Futures Drop; STMicroelectronics May Fall

By Alexis Xydias and Sarah Jones

Jan. 12 (Bloomberg) -- European stock-index futures fell, indicating the Dow Jones Stoxx 600 Index will drop for a fourth straight day, on concern that the global recession is snuffing out profit growth.

STMicroelectronics NV may decline after UBS AG advised selling shares of Europe’s largest computer-chip maker. UBS may slide after SonntagsZeitung said the Swiss bank will post an 8 billion-franc ($7.2 billion) loss for the fourth quarter.

Futures on the Dow Jones Euro Stoxx 50 Index, a benchmark for the euro region, fell 0.5 percent to 2,484 at 7:47 a.m. in London. The U.K.’s FTSE 100 Index may decrease 24, according to Cantor Index, a betting firm.

The MSCI Asia Pacific Index dropped 1.1 percent, led by raw- material producers and industrial companies. Futures on the Standard & Poor’s 500 Index slipped 0.4 percent after President- elect Barack Obama said in an ABC interview that reviving the economy will require scaling back on campaign promises and personal sacrifice from all Americans. Alcoa Inc., the largest U.S. aluminum producer, unofficially kicks of the U.S. earnings season today.

“The economic outlook appears to be still deteriorating,” said Lawrence Peterman, investment director at Eden Financial Ltd. in London. “Markets are focusing a lot on the jobs market in the U.S., and the outlook for Europe is also poor. All this will feed through to corporate profits.”

Europe’s Stoxx 600 dropped for a third straight day on Jan. 9 amid concern rising U.S. unemployment signals that the global economic slump is deepening. The regional benchmark had rallied on the first two days of trading last week amid speculation government efforts to revive growth with stimulus packages and interest-rate cuts will boost the economy.

STMicro, UBS

STMicroelectronics was cut to “sell” from “neutral” by UBS, which said “there is a risk of revenues coming in lower than revised guidance.”

UBS may post an 8 billion-franc loss for the final quarter of 2008, SonntagsZeitung reported yesterday, without saying where it got the information. Such a result would take the bank’s full- year deficit to more than 20 billion francs, making it the biggest Swiss corporate loss, the Zurich-based newspaper wrote. UBS spokeswoman Rebeca Garcia declined to comment on the report.

Oce NV may be active after the world’s largest maker of wide-format printers posted a 98 percent slump in fourth-quarter profit because of an “unprecedented economic downturn.” Oce will pay a dividend for 2008 of 15 cents a share, down from 64 cents in 2007, the company said.

Earnings

The European companies tracked by Bloomberg that announced earnings since the Stoxx 600 began to rebound from its 2008 low on Nov. 21 have posted a 75 percent decline in average profit, missing analysts’ estimates by 91 percent.

Premier Foods Plc may move. The owner of the Hovis brand is asking its banks to let it make a rights offer in exchange for relaxing debt covenants, the Times reported, citing people close to the negotiations. Premier Foods proposed to sell about 40 percent of the company to private equity and hedge fund investors at a presentation to lenders last week, the Times said.

Roche Holding AG may be active after the Financial Times reported the world’s biggest maker of tumor drugs is preparing to raise its bid for biotechnology company Genentech Inc.

The Stoxx 600 has slumped 43 percent since the start of last year as $1 trillion in losses at financial companies eroded profits and the U.S., Europe and Japan fell into simultaneous recessions.

The index has rebounded 14 percent since Nov. 21 as investors speculated that Obama will boost the world’s biggest economy with tax cuts. The Federal Reserve has slashed interest rates to as low as zero percent, while the European Central Bank has scope to reduce borrowing costs further after the region’s inflation rate fell to the lowest in more than two years.

The deepening economic contraction in the U.K. spurred the Bank of England last week to cut its benchmark interest rate to the lowest since the central bank was founded in 1694.

To contact the reporter on this story: Alexis Xydias in London at axydias@bloomberg.net; Sarah Jones in London at sjones35@bloomberg.net.