By Adam Haigh
April 15 (Bloomberg) -- Stocks in Europe and U.S. futures fluctuated between gains and losses and Asian shares fell after Intel Corp. said it faces a “fragile” economy and the stronger yen dimmed the earnings outlook for Japanese exporters.
Intel dropped 4.1 percent after Chief Executive Officer Paul Otellini said the world’s largest chipmaker isn’t ready to predict growth this quarter. Canon Inc., which generates more than half of its sales from the U.S. and Europe, slid 2.6 percent. GlaxoSmithKline Plc rose for the first time in seven days, leading gains among European companies whose profits are less tied to the pace of economic growth.
The earnings season is “going to be a reality check,” said Thomas Tilse, Frankfurt-based head of portfolio strategy at Cominvest, which has $65 billion. “We are going to see results that are in the midst of a big recession,” he said in a Bloomberg Television interview.
The MSCI World Index retreated 0.2 percent at 12:17 p.m. in London. The gauge of 23 developed countries has rebounded 25 percent since March 9 as lenders from Citigroup Inc. to Bank of America Corp. said they made money at the beginning of 2009. Investors also speculated that Treasury Secretary Timothy Geithner’s plan to finance as much as $1 trillion in purchases of illiquid real-estate assets from banks will pull the global economy out of its first recession since World War II.
Europe’s Dow Jones Stoxx 600 Index was little changed as European Central Bank council member Axel Weber said reducing the bank’s benchmark interest rate below 1 percent risks bringing the interbank money market to a standstill. The MSCI Asia Pacific Index slid 0.5 percent, snapping a four-day, 5.6 percent rise.
Earnings Season
Standard & Poor’s 500 Index futures added 0.1 percent. Companies from Citigroup to General Electric Co. will follow Intel with earnings reports this week. Analysts estimate that profits at S&P 500 companies decreased for the seventh straight quarter in the January to March period, the longest stretch of declines since at least the Great Depression.
U.S. futures were boosted by CSX Corp., which rose after posting a smaller-than-expected drop in profit.
Intel slid 4.1 percent to $15.35 in pre-market trading in New York. The company still faces a “fragile global economic environment,” Otellini said. The chipmaker’s first-quarter net income plunged 55 percent to $647 million.
UBS Declines
UBS AG, Switzerland’s biggest bank, fell 3.8 percent to 12.77 Swiss francs after saying it will reduce the number of employees globally to 67,500 in 2010 from the previous target of 75,000. UBS reported a loss of almost 2 billion francs ($1.75 billion) for the first quarter.
Financial institutions worldwide have announced almost 300,000 job cuts since the beginning of the credit crisis as writedowns and losses swelled to almost $1.3 trillion.
Japan’s exporters fell as the stronger yen eroded the value of sales generated overseas. The yen climbed as high as 98.15 against the dollar from 99.79 at the close in Tokyo yesterday.
Canon slid 2.6 percent to 3,030 yen. Nissan Motor Co. retreated 5.3 percent to 465 yen.
Rio Tinto Group slipped 4.4 percent to 2,391 pence. The world’s third-largest mining company reported a 15 percent fall in first-quarter iron-ore output as floods cut deliveries from its Australian mines and demand from steelmakers slumped.
Industrial output in the U.S. probably fell 0.9 percent in March, economists forecast before a Federal Reserve report due at 9:15 a.m. in Washington. At 8:30 a.m., figures from the Labor Department are projected to show the cost of living climbed 0.1 percent in March after a 0.4 percent gain the previous month.
A third report, from the New York Fed, may show manufacturing in the state is shrinking again this month.
‘Volatility Bubble’
U.S. equities were lowered to “underweight” at HSBC Holdings Plc, as the bank recommended investors buy into stocks in Asia, emerging markets and Europe to take advantage of falling volatility.
“What we’ve labeled the ‘volatility bubble’ may be about to deflate at last,” Kevin Gardiner, HSBC’s London-based chief equity strategist, wrote in a report. “The non-U.S. markets may do better if risk appetite revives.”
India’s Bombay Stock Exchange Sensitive Index added 3.3 percent. BlackRock Inc., UBS and billionaire Wilbur Ross are betting the measure will continue to climb after posting the best returns in the past month among the world’s biggest emerging-market economies.
Glaxo, CSX
Glaxo, the world’s second-biggest drugmaker, rose 2 percent to 1,028.5 pence.
CSX, the third-largest U.S. railroad company, advanced 6.2 percent to $30.14 in German trading. The company posted profit of $246 million, or 62 cents a share, exceeding the 51-cent average estimate of 17 analysts surveyed by Bloomberg.
EBay Inc. gained 2 percent to $14.67 in German trading after saying it is planning an initial public offering for the Skype Internet-calling unit in the first half of 2010.
Syngenta AG added 6.2 percent to 235.2 francs. Price increases and demand for crop-protection products helped the world’s biggest maker of agricultural chemicals contain the costs of a stronger dollar.
Investors in 10 countries grew less concerned that stocks will keep falling, the first unanimous improvement in Bloomberg’s Professional Global Confidence Survey since it began 17 months ago, after equities posted their steepest increase since April 2003.
Participants turned bullish on Japan’s Nikkei 225 Stock Average, Brazil’s Bovespa Index , Mexico’s Bolsa and Italy’s S&P/MIB, predicting gains in the next six months. They became less bearish in the U.S., France, Germany, Spain, Switzerland and the U.K. The 1,214 responses between April 6 and April 10 followed the biggest monthly rally for the MSCI World Index in six years.
To contact the reporter on this story: Adam Haigh in London at ahaigh1@bloomberg.net
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