By Daniela Silberstein
Aug. 7 (Bloomberg) -- European and Asian stocks fell as results from Royal Bank of Scotland Group Plc and Konica Minolta Holdings Inc. spurred speculation that a five-month rally has outpaced the prospects for earnings. U.S. futures slipped before a report that may show the unemployment rate climbed.
RBS slid 12 percent after the U.K.’s biggest government- owned bank reported a first-half loss. BHP Billiton Ltd., the world’s largest mining company, led raw-material producers lower as metals retreated. Konica Minolta slumped 10 percent in Tokyo after the maker of printers and office equipment said first- quarter profit tumbled 98 percent.
Europe’s Dow Jones Stoxx 600 Index slid 1 percent to 225.69 as of 12:41 p.m., trimming its fourth straight weekly gain to 0.4 percent. The gauge has climbed 43 percent since March 9 as companies from GlaxoSmithKline Plc to Goldman Sachs Group Inc. reported better-than-estimated earnings. The regional measure is now valued at 39.2 times the profits of its companies, the highest level since September 2003, weekly data compiled by Bloomberg show.
“If you look at earnings, most of them beat but they are quite volatile,” Philippe Gijsels, a senior structured equity strategist at Fortis Global Markets in Brussels, said in a Bloomberg Television interview. “We’re still in for a rough ride in the financial sector. I would be very cautious for the second half. It might be time to take some money off the table.”
U.S. Jobs Report
Futures on the Standard & Poor’s 500 Index slipped 0.2 percent before a report that may show a slowing pace of U.S. job losses last month wasn’t enough to prevent the unemployment rate from climbing to a 26-year high.
Employers probably cut 325,000 workers from payrolls in July after trimming 467,000 the prior month, according to the median of 82 estimates in a Bloomberg News survey. The unemployment rate likely rose to 9.6 percent from 9.5 percent.
“As the session moves on all eyes will fall on the U.S. as the non-farm payroll figures are released,” Jimmy Yates, head of equities at CMC Markets in London, wrote. “The release has the potential to undo all of the hard work of the last few sessions.”
The MSCI Asia Pacific Index sank 0.7 percent today as lower profits at DBS Group Holdings Ltd. helped fuel concern that the rally in stocks has outpaced earnings prospects.
Chinese Stocks
China’s Shanghai Composite Index retreated 2.9 percent as developers and materials producers fell, extending this week’s drop to 4.4 percent, the biggest slide since February. China Construction Bank Corp. President Zhang Jianguo said the nation’s second-largest bank will cut new lending by about 70 percent in the second half after “some loans didn’t go into the real economy.”
Chinese officials said they will scrutinize stock-market gains without capping new lending after a record $1.1 trillion of loans in the first half added to credit risks and threatened to cause asset bubbles.
Tudor Investment Corp., the $10.8 billion hedge-fund firm run by Paul Tudor Jones, said equity markets could decline later this year, creating buying opportunities.
Slowing growth in China and the return of front-page stories on swine flu may be “further catalysts for global equity markets to pause in September,” the Greenwich, Connecticut-based firm said in an Aug. 3 client letter, a copy of which was obtained by Bloomberg News.
German industrial production unexpectedly declined in June after increasing the most in more than 18 years a month earlier, the Economy Ministry in Berlin said today.
RBS Retreats
RBS plummeted 12 percent to 47 pence. The bank said results will be poor for another two years as it reported an unexpected first-half loss of 1.04 billion pounds ($1.74 billon) after setting aside 7.52 billion pounds to cover bad loans and other impairments. Analysts had predicted net income of 1.1 billion- pounds, according to the median of six estimates in a Bloomberg survey.
“We are two years in and thing are improving but only gradually and the wake-up call from RBS this morning underlines that,” Julian Chillingworth, chief investment officer at Rathbone Unit Trust Management in London, told Bloomberg Television. “We are not out of the woods. We’ve got further impairment to come.”
Allianz SE slipped 2.7 percent to 73.49 euros. Europe’s biggest insurer by market value said profit fell 16 percent to 1.87 billion euros ($2.69 billion) in the second quarter as earnings at its property and casualty unit declined.
Earnings in Europe slumped 33 percent in the second quarter, while more than half of profits have topped analysts’ projections, according to data compiled by Bloomberg.
Basic Resources
BHP Billiton retreated 2.6 percent to 1,532.5 pence. Rio Tinto Group, the world’s third-largest mining company, lost 4.6 percent to 2,380.5 pence. Kazakhmys Plc, Kazakhstan’s biggest copper mining company, slid 2.6 percent 897.5 pence.
Copper dropped in London on concern demand from China the world’s biggest user of the metal, may weaken. Nickel, lead, zinc and tin also declined.
Umicore SA tumbled 9.9 percent to 17.35 euros. The world’s largest precious-metals recycler posted an 85 percent slump in first-half profit and forecasting earnings won’t improve in the rest of the year.
Andritz AG retreated 3.4 percent to 31.50 euros. The Austrian maker of machines for the paper and steel industries, said second-quarter net income plummeted 83 percent to 6.9 million euros.
Peugeot Drops
PSA Peugeot Citroen slid 7.9 percent to 20.70 euros. Europe’s second-largest carmaker had its debt rating lowered to junk by Standard & Poor’s, which cited the company’s deteriorating profitability.
Konica retreated 10 percent to 891 yen. The company said yesterday after markets closed net income dropped 98 percent to 299 million yen ($3.1 million) for the three months ended June, from 17.6 billion yen a year earlier.
Singapore’s DBS slid 3.5 percent to S$12.84. The bank said net income fell 15 percent in the second quarter as non- performing loans climbed to 2.8 percent of total lending from 1.4 percent a year ago.
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