Stocks Decline Around World on Alcoa; Bank of Ireland Slumps

By Sarah Jones

April 8 (Bloomberg) -- Stocks fell, sending the MSCI World Index lower for a third day, after Alcoa Inc. opened the U.S. earnings season by reporting a second straight quarterly loss.

Alcoa, the first Dow Jones Industrial Average company to announce first-quarter results, retreated 3.2 percent in Europe. BHP Billiton Ltd. and Anglo American Plc dropped as metals and oil slid. Sharp Corp. slumped 6.1 percent after posting its first annual loss since listing on the Tokyo Stock Exchange in 1956. Bank of Ireland Plc sank 8.8 percent as Moody’s Investors Service cut the financial-strength ratings on 12 Irish banks on concern loan losses are increasing.

“The big focus is on the earnings season,” said Henk Potts, a London-based fund manager at Barclays Stockbrokers Ltd., which as about $45 billion under management. “There is no doubt that we are going to hear some pretty disappointing stories. The market will still remain reasonably cautious against a backdrop of falling profit expectations.”

The MSCI World Index slipped 0.5 percent at 12:01 p.m. in London. The gauge of 23 developed markets has advanced 20 percent since March 9 on optimism the Federal Reserve’s plan to buy Treasuries and bonds backed by mortgages to drive down interest rates and U.S. Treasury Secretary Timothy Geithner’s pledge to finance the purchase of toxic assets will pull the global economy out of a recession and revive corporate profits.

‘Terrible’ Earnings

Standard & Poor’s 500 Index futures retreated 0.5 percent, indicating the gauge may extend yesterday’s 2 percent drop. George Soros and Marc Faber predicted this week that the past month’s rebound in equities will falter, while Hugh Young, managing director of Aberdeen Asset Management Plc’s Asian unit, said in a Bloomberg Television interview today the rally was a “dead cat bounce,” as companies report “terrible” earnings.

Nouriel Roubini, the New York University professor who predicted the economic crisis, told Canada’s Business News Network yesterday he sees no reason to change his forecast that the U.S. economy will continue to contract through this year.

Europe’s Dow Jones Stoxx 600 Index slid 0.4 percent, a fourth day of declines. The British economy shrank 1.5 percent in the first quarter as the recession increasingly resembled the one that started in 1979 when Margaret Thatcher took power, the National Institute of Economic and Social Research said.

The MSCI Asia Pacific Index dropped 2.2 percent as Daiwa Securities Group Inc., Japan’s second-largest brokerage, said it will write down the value of securities holdings.

Alcoa Drops

Alcoa fell 3.2 percent to $7.54 in German trading. The largest U.S. aluminum producer reported a $497 million net loss as the recession reduced demand for the metal. Excluding some items, the loss was 59 cents a share, trailing the average estimate of 14 analysts for a loss of 56 cents.

The U.S. earnings decline that has lasted for six straight quarters will get worse before it gets better, with profits at S&P 500 companies decreasing for three more periods, Bloomberg data show. In Europe, profits for companies in the Dow Jones Stoxx 600 Index will climb 22 percent for the full year, estimates compiled by Bloomberg show.

BHP, the world’s largest mining company dropped 1.6 percent to 1,338 pence. Anglo American fell 2.8 percent to 1,260 pence. Xstrata Plc, the world’s fourth-largest copper producer, dropped 3.2 percent to 511 pence.

Copper slid in Asia as some investors deemed the recent climb to a five-month high as excessive amid renewed concern about the financial crisis. Crude oil decreased for a fourth day on speculation a government report today will show U.S. supplies increased as the recession curbed fuel demand.

Sharp, Daiwa

Sharp, Japan’s largest maker of liquid-crystal-display televisions, lost 6.1 percent to 813 yen after reporting a 130 billion-yen ($1.3 billion) loss because of additional restructuring costs. The net loss was larger than the 100 billion yen forecast on Feb. 6.

Daiwa sank 6 percent to 483 yen. The company said it will report an annual loss as it books a 17.4 billion yen decline in the value of securities holdings.

Bank of Ireland, the country’s largest lender by assets, sank 8.8 percent to 88 euro cents, after earlier slumping as much as 38 percent. Allied Irish Banks Plc slumped 12 percent to 1.13 euros.

Moody’s reduced its rating on 12 Irish lenders by at least one level, saying losses on property loans are likely to “significantly weaken” capital.

Ireland’s government said it will buy as much as 90 billion euros ($120 billion) of real-estate loans from the country’s biggest lenders in an effort to salvage the banking system.

Pernod Slides

Pernod Ricard SA lost 5.7 percent to 41.98 euros after the world’s second-largest liquor maker announced a 1 billion-euro rights offer and sold its Wild Turkey bourbon brand for $575 million to speed up debt reduction.

Cap Gemini SA dropped 2.2 percent to 25.60 euros after Europe’s largest computer-services company said it will sell as much as 575 million euros of convertible bonds.

Daimler AG led German automakers higher as Goldman Sachs Group Inc. recommended the shares and the government agreed to more than triple payments to buyers of new low-emission vehicles to spur car sales.

Daimler, which today forecast a “gradual improvement” in profit this year, rallied 5.7 percent to 23.89 euros. Goldman Sachs upgraded the second-largest maker of luxury cars to “buy” from “neutral,” citing restructuring measures and more clarity on the company’s operational and financial outlook.

Bayerische Motoren Werke AG rose 4.6 percent to 25.01 euros after Goldman Sachs added the world’s biggest luxury carmaker to its “conviction buy” list. Porsche SE, the maker of the 911 sports car, increased 4.4 percent to 44.55 euros.

Reuters reported the Porsche is seeking to increase its syndicated loan to 12.5 billion euros, citing unidentified “banking sources.”

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