By Sarah Jones
Feb. 16 (Bloomberg) -- Stocks in Europe and Asia fell as the Group of Seven failed to spell out steps to fix a “severe” recession, Japan’s economy contracted the most since 1974 and a business lobby warned the U.K. will shrink the most in almost three decades.
Lloyds Banking Group Plc tumbled 12 percent as speculation mounted the British lender may need further capital to shore up its balance sheet. Takefuji Corp. slid 9.5 percent after Japan’s third-biggest consumer lender forecast a full-year loss and the country’s gross domestic product contracted at an annual 12.7 percent pace.
“It is all just illustrating that we are really in a deep recession,” said Mike Lenhoff, who helps oversee about $36.4 billion as chief strategist at Brewin Dolphin Securities Ltd. in London. “Markets aren’t getting any relief from any good news at the moment. It is going to remain under pressure for a while.”
The MSCI World Index slid 0.6 percent at 9:47 a.m. in London, extending its 2009 retreat to 9.6 percent. The gauge of 23 developed markets has dropped for five days as companies from Electricite de France SA to Diageo Plc posted disappointing results and U.S. Treasury Secretary Timothy Geithner failed to convince investors his bank rescue will work.
Futures on the Standard & Poor’s 500 Index declined 0.4 percent. U.S. markets will be closed today for Presidents’ Day.
Legal & General
Europe’s Dow Jones Stoxx 600 Index fell for the fourth time in five days, losing 0.7 percent. Legal & General Group Plc slid after the Financial Times reported the insurer is in talks with the U.K. Financial Services Authority over the amount of money it should set aside for defaults in its bond portfolio.
The MSCI Asia-Pacific Index decreased 0.6 percent as washing-machine maker Fisher & Paykel Appliances Holdings Ltd. said it doesn’t expect a profit this fiscal year.
The G-7’s finance ministers and central bankers said in a statement released after talks in Rome yesterday that they were working to restore confidence in markets and revive the world economy. They predicted the full effect of individual rescue packages will “build over time” and a “severe” economic downturn will persist for most of 2009.
The Japanese economy contracted the most since the 1974 oil shock, according to figures from the Cabinet Office, with gross domestic product falling for a third straight quarter.
The U.K.’s GDP will contract 3.3 percent this year, instead of the 1.7 percent predicted in November, the Confederation of British Industry said. By the end of 2009, the economy will have contracted for six consecutive quarters, it said.
Lloyds Retreats
Lloyds slumped 12 percent to 53.9 pence. The shares fell 33 percent on Feb. 13 after the lender said it expected HBOS Plc, the U.K. lender it took over last month, to report a 10 billion- pound ($14.5 billion) pretax loss.
“We cannot discount the prospect of Lloyds requiring further capital if HBOS turns even worse,” Collins Stewart analyst Alex Potter wrote in a report to clients today.
Takefuji tumbled 9.5 percent to 572 yen. The lender forecast a full-year loss of 264.1 billion yen ($2.9 billion) on rising claims to return overpaid interest and lower income from lending. The company had estimated in November a profit of 3 billion yen.
Legal & General lost 9.1 percent to 45 pence. The company may increase the reserve funds when it reports preliminary results next month, the FT said. Spokesman Richard King the company “had no more conversations with the FSA than we usually have before the end of year results.”
Fisher & Paykel
Fisher & Paykel plummeted 35 percent to 65 New Zealand cents. The company, which makes about 80 percent of its sales outside the country, said it may break even in the 12 months ending March 31, after reporting a profit of NZ$54.2 million ($28 million) a year earlier.
Premiere AG slid 7.6 percent to 2.56 euros. Germany’s biggest pay-television company reported its fifth straight quarterly loss after refinancing debt and said subscriber growth will be “broadly flat” in the first half of 2009. The net loss widened to 114.3 million euros ($146 million) from 23.5 million euros a year earlier.
Profits have declined 65 percent for 613 companies in western Europe that have released earnings since Jan. 12, data compiled by Bloomberg show.
TNT Earnings
TNT NV slipped 1.2 percent to 14.43 euros. Europe’s second- biggest express-delivery company said fourth-quarter net income fell 60 percent to 59 million euros. The underlying figure, excluding currency changes and restructuring charges, declined 17 percent to 207 million euros, the Dutch company said.
Air Liquide SA added 4.7 percent to 63 euros. The world’s biggest maker of industrial gases, forecast sales and profit growth in 2009, buoyed by demand for gases used in healthcare and refining. The company also said it will propose a 2008 dividend of 2.25 euros a share.
Aareal Bank AG climbed 5.5 percent to 4 euros after the bank applied for state aid and guarantees even as the German commercial-property lender posted a profit in the fourth quarter and for all of 2008.
Aareal Bank will receive 525 million euros in fresh funds from the German Financial Markets Stabilization Fund, SoFFin, as well as a debt guarantee of 4 billion euros with a maximum maturity of 36 months.
To contact the reporter on this story: Sarah Jones in London at sjones35@bloomberg.net.
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