European, U.S. Stock Futures Drop; Banks, Carmakers May Slump

By Sarah Jones

March 30 (Bloomberg) -- European and U.S. stock futures fell and Asian shares tumbled as the Obama administration warned that some banks will need more government aid and bankruptcy may be the best option for General Motors Corp. and Chrysler LLC. Treasuries and the yen advanced.

Deutsche Bank AG and UBS AG may decline after U.S. Treasury Secretary Timothy Geithner said some banks will need “large amounts” of assistance. Daimler AG might drop as an Obama administration official said GM and Chrysler must overhaul their recovery plans to justify further taxpayer aid. BHP Billiton Ltd. may decrease after commodities prices slid and Aluminum Corp. of China Ltd. said profit plunged.

Futures on the Dow Jones Euro Stoxx 50 Index, a benchmark for the euro region, slipped 2.3 percent to 1,993 at 7:17 a.m. in London. The U.K.’s FTSE 100 Index may drop 55, according to IG Markets, a betting firm. Futures on the Standard & Poor’s 500 Index dropped 2.2 percent.

“There may be a lack of confidence starting to creep in,” said Geoff Wilkinson, head of research at Mint Equities Ltd. in London. “Any bad news from the banks is going to be bad news for the indexes.”

The U.S. government’s comments on banks, GM and Chrysler helped push the yield on the 10-year Treasury note down five basis points to 2.71 percent, according to BGCantor Market Data, while the yen and the dollar climbed against the euro.

The MSCI World Index has advanced 19 percent since March 9, rebounding from its worst annual start on record, as banks from Citigroup Inc. to JPMorgan Chase & Co. said they made money in the first two months of 2009 and Geithner unveiled plans to rid financial firms of toxic assets.

Deutsche Bank, UBS

Deutsche Bank and UBS may follow their American depositary receipts lower after Geithner yesterday said “some banks are going to need some large amounts of assistance” on the ABC News program “This Week.”

The Treasury has about $135 billion left in a financial- stability fund while declining to say whether he will need to request additional money, Geithner said.

Separately, Sonntag reported UBS may cut 8,000 jobs and “write down billions,” without giving a currency unit or saying where it obtained the information.

Spain mounted its first major bank rescue in 16 years as the state took over Caja Castilla-La Mancha after efforts to choreograph its purchase by a rival lender failed.

Hypo Real Estate Holding AG may fall after the bailed out German commercial real-estate lender said it posted a wider- than-expected loss of 5.46 billion euros ($7.3 billion) last year and that the government will take an 8.7 percent stake as a first step toward nationalization.

Daimler, Volkswagen

Daimler and Volkswagen AG may lead carmakers lower as the Obama administration demanded the resignation of GM Chief Executive Officer Rick Wagoner and said Chrysler will get $6 billion in aid only if it completes a partnership with Italian carmaker Fiat SpA in 30 days.

Separately, PSA Peugeot Citroen, Europe’s second-biggest carmaker, fired Chief Executive Officer Christian Streiff amid the worst auto slump in more than 15 years.

BHP dropped 4.3 percent in Sydney trading as Aluminum Corp. of China posted a 99.9 percent decline in 2008 profit and forecast a loss in the first quarter on lower prices.

Separately, oil declined for a second day in New York on speculation stockpiles will increase, while copper retreated as investors’ optimism about an economic recovery faded.

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