European, U.S. Stock-Index Futures Drop; Asian Shares Decline

By Daniela Silberstein

Aug. 21 (Bloomberg) -- European and U.S. stock-index futures fell as commodities dropped and the U.S. said it would close the federal “cash for clunkers” program that helped revive auto sales. Asian shares declined amid speculation that China will tighten capital requirements and curb lending.

Royal Dutch Shell Plc and BHP Billiton Ltd. may slip in European trading after oil slid in New York and copper decreased on the London Metal Exchange. Daimler AG, which generates about 18 percent of its revenue in America, may move after the U.S. said it will stop accepting applications for the clunkers plan on Aug. 24.

Futures on the Euro Stoxx 50 Index dropped 0.2 percent at 7:20 a.m. in London. The U.K.’s FTSE 100 Index is set to open 31 points lower, according to inter-dealer broker BGC Partners.

Standard & Poor’s 500 Index futures expiring in September declined 0.4 percent before a report on sales of existing homes. The MSCI Asia Pacific Index fell 1 percent, extending its biggest weekly drop in two months, as earnings at Insurance Australia Group Ltd. and Billabong International Ltd. trailed estimates.

China plans to tighten capital requirements for banks, threatening to curb the record lending that’s fueled a 60 percent rally in the nation’s stock market, three people familiar with the matter said.

Shanghai’s Rally

The Shanghai Composite Index almost doubled during the first seven months of this year through Aug. 4, after falling 65 percent in 2008. Since reaching this year’s high on Aug. 4, it’s plummeted 15 percent. The index on Aug. 19 briefly fell 20 percent from this year’s high, the threshold for a bear market, before ending the day down 19.8 percent. The gauge fluctuated between gains and losses today.

Europe’s Stoxx 600 has rallied 45 percent since March 9 as companies from Roche Holding AG to Johnson & Johnson reported better-than-estimated results and Germany and France unexpectedly returned to economic growth.

The increase left the index valued at 40.6 times the profits of its companies, the most expensive level since 2003, weekly data compiled by Bloomberg show. The Stoxx 600 is up 0.4 percent this week, heading for its fifth advance in six weeks.

Shell and BP Plc, Europe’s largest oil producers, will probably drop. Crude fell 0.5 percent in New York after yesterday’s unexpected increase in initial U.S. jobless claims raised concern that fuel demand may slow in the world’s biggest economy.

BHP, Rio Tinto

BHP Billiton, the world’s largest mining company, lost 0.9 percent to A$36.78 in Sydney. Chief Executive Officer Marius Kloppers said global demand for metals won’t rise beyond what is required to rebuild stockpiles for the remainder of this year.

Rio Tinto Group, the third-biggest mining company, slid 2.6 percent to A$56.53. Copper fell 0.7 percent in London, extending its first weekly decline in six.

Daimler and Volkswagen AG may move. The clunkers plan, which offers auto buyers discounts of as much as $4,500 to trade in older cars and trucks for new, more fuel-efficient vehicles, has recorded more than 457,000 dealer transactions worth $1.9 billion in rebates, the Transportation Department said in a statement yesterday.

Insurance Australia, the nation’s largest insurer of cars and houses, slumped 6.6 percent to A$3.55. The company posted net income of A$181 million ($151 million) in the 12 months ended June 30. That’s lower than the A$229.7 million estimate of seven analysts compiled by Bloomberg.

Billabong, U.S. Housing

Billabong, Australia’s biggest surfwear maker, sank 5.1 percent to A$9.67. The company said net income fell 13 percent to A$152.8 million in the 12 months ended June, missing the A$158.5 million average analyst estimate.

Sales of existing U.S. homes probably climbed 2.1 percent to a 5 million annual rate in July, the highest level in 10 months, signaling the housing crisis is easing, economists said before a report today.

In another sign the worst of the U.S. recession is over, a gauge of current conditions showed the economy steadied last month. The Conference Board’s coincident index was unchanged in July after falling in 17 of the 19 months since the contraction started in December 2007, figures from the New York-based private research group showed yesterday.

To contact the reporter on this story: Daniela Silberstein in Zurich at dsilberstei2@bloomberg.net.