By Sarah Jones
Jan. 14 (Bloomberg) -- European stocks retreated for a sixth day and U.S. futures dropped as Deutsche Bank AG reported a fourth-quarter loss and investors speculated financial firms may need to raise more capital.
Deutsche Bank sank more than 10 percent after the German lender said it had a loss of 4.8 billion euros ($6.3 billion). HSBC Holdings Plc tumbled 7.9 percent as Morgan Stanley said Europe’s largest bank by market value may have to raise as much as $30 billion and halve its dividend. Citigroup Inc. fell 2.2 percent in German trading.
The Dow Jones Stoxx 600 Index dropped 1.7 percent to 198.21 at 12:44 p.m. in London, erasing an earlier gain of as much as 0.4 percent. A measure of bank shares slid 5.5 percent, the steepest decline in more than a month.
“It’s like having teeth pulled,” said David Hussey, London-based head of European equities at MFC Global Investment Management, which has about $220 billion in global assets. “There is constant bad news on the screens. We had the first wave of subprime writedowns at the banks and now we are seeing real economy writedowns.”
Europe’s Stoxx 600 has lost 6.6 percent in the past six days as companies from Intel Corp. to Alcoa Inc. and Wal-Mart Stores Inc. spurred concern the profit outlook is worsening and lower commodity prices dragged down oil and metals producers.
The measure is down 45 percent since the beginning of last year as credit losses and writedowns topped $1 trillion in the worst financial crisis since the Great Depression and the U.S., Japan and Europe fell into the first simultaneous recessions since World War II.
National Markets
National benchmark indexes declined in all 18 western European markets except Belgium. Germany’s DAX retreated 1.8 percent as Commerzbank AG tumbled more than 9 percent. France’s CAC 40 lost 1.8 percent. U.K.’s FTSE 100 dropped 2.1 percent as Anglo American Plc led mining shares lower.
Standard & Poor’s 500 Index expiring in March slipped 0.9 percent, while the MSCI Asia Pacific Index rose 1 percent.
Deutsche Bank sank 10 percent to 21.83 euros. The bank had losses after the financial crisis pummeled its debt and equity trading results, according to a preliminary report.
Separately, Deutsche Post AG said it will take a stake of about 8 percent in Deutsche Bank as part of a revised deal to sell its Deutsche Postbank AG unit to Germany’s biggest bank.
Earnings at companies in the Stoxx 600 dropped 16 percent on average in 2008 and will fall 1.2 percent this year, according to forecasts compiled by Bloomberg. Analysts estimate profits at financial firms in the measure slumped 56 percent last year, the worst decline among 10 industries.
Commerzbank, Citigroup
Commerzbank, the country’s second-largest lender, declined 9.2 percent to 3.92 euros. BNP Paribas SA, France’s biggest bank, lost 7 percent to 31.62 euros.
Citigroup fell 2.2 percent to $5.77. Morgan Stanley has bought control of the Smith Barney broker unit of Citigroup for $2.7 billion, two weeks after Bank of America Corp. purchased securities firm Merrill Lynch & Co., widening the shakeout on Wall Street from the worst credit panic in seven decades.
HSBC tumbled 7.9 percent to 589.5 pence. The bank’s profit is likely to fall “sharply” this year and won’t recover until 2011 at the earliest, Morgan Stanley analysts including Michael Helsby and Anil Agarwal wrote in a note yesterday. Gareth Hewett, an HSBC spokesman in Hong Kong, declined to comment.
UniCredit SpA, Italy’s largest bank by assets, decreased 3.2 percent to 1.68 euros while smaller rival Banco Popolare SC dropped 3 percent to 5.33 euros.
‘Underperform’
Exane BNP Paribas downgraded the lenders to “underperform” from “neutral,” citing falling interest rates and rising credit provisions. The brokerage also cut share-price estimates on all Italian banks under coverage by an average 37 percent.
Anglo American led a retreat by mining companies as Citigroup Inc. downgraded the shares and base metal prices declined in London. The world’s fourth-biggest diversified mining company fell 3.4 percent to 1,380 pence. Xstrata Plc, the fourth- largest copper producer, slumped 5.1 percent to 739 pence as Citigroup cut its recommendation for both stocks to “hold” from “buy.”
The brokerage also downgraded shares of Antofagasta Plc and Kazakhmys Plc. Zinc fell in London on speculation that China’s stockpiling of the metal won’t be enough to erode a global oversupply. Copper also dropped.
Siemens AG sank 7.6 percent to 44.45 euros. Merrill Lynch & Co. downgraded the shares to “neutral” from “buy” after Europe’s largest engineering company said first-quarter orders dropped “significantly.”
Man Group
Man Group Plc decreased 6.7 percent to 210.25 pence. The world’s biggest publicly traded hedge-fund manager said assets under management dropped 21 percent to $53.3 billion in the last three months of 2008 as it wrote down two funds linked to Bernard Madoff.
Investors from New York to Sao Paulo have grown less pessimistic about stocks over the next six months on speculation a U.S. stimulus plan and the lowest interest rates on record will revive the global economy, a survey of Bloomberg users from Jan. 5 to Jan. 9 showed. Fewer respondents in the Bloomberg Professional Global Confidence Survey are predicting declines for the S&P 500, Brazil’s Bovespa, the FTSE 100, the CAC 40, the DAX and Spain’s IBEX 35.
Still, concern that stock losses will deepen remains elevated even after falling from record levels. The benchmark index for European options, the VStoxx Index, climbed for a third day, adding 3.1 percent to 47.66. The gauge, which measures the cost of using options as insurance against declines in the Euro Stoxx 50 Index, surged to 87.51 in October, the highest since at least 2001, data compiled by Bloomberg show.
To contact the reporter on this story: Sarah Jones in London at sjones35@bloomberg.net.
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