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

By Adria Cimino

Dec. 17 (Bloomberg) -- European stocks fell for the first time in six days as the Federal Reserve signaled it will remove most emergency measures and Standard & Poor’s cut its rating for Greece. Asian shares and U.S. futures dropped.

Barclays Plc and Deutsche Bank AG led European lenders lower, losing at least 1.5 percent. Westpac Banking Corp., Australia’s second-largest bank by market value, dropped 1.8 percent in Sydney. Shire Plc retreated 1.7 percent after UBS cut its recommendation on the shares.

The Dow Jones Stoxx 600 Index decreased 0.7 percent to 248.59 at 8:04 a.m. in London, snapping its longest winning streak since September. The benchmark gauge for European equities has rallied 57 percent since March 9, leaving it valued at 56 times its companies’ reported earnings, near the highest level since 2003, weekly data compiled by Bloomberg show.

U.S. stocks erased most of their advance yesterday after yields on 10-year Treasury notes rose. Standard & Poor’s 500 Index futures retreated 0.4 percent today, while the MSCI Asia Pacific Index slid 0.8 percent.

The Fed, after concluding a two-day meeting yesterday, said most of its lending programs would expire as scheduled Feb. 1 because of “improvements in the functioning of financial markets.” Policy makers said the labor market is stabilizing yet kept a pledge to keep interest rates “exceptionally low” for an “extended period.”

Bernanke, Greenspan

Policy makers led by Chairman Ben S. Bernanke, who faces a confirmation vote for a second term by the Senate Banking Committee today, met after a week of reports suggesting growth is picking up. With inflation forecast to be “subdued for some time,” investors maintained bets the Fed won’t tighten policy until August.

“The ongoing uncertainty as to just how long this lax monetary policy can be sustained for did little to appease investors,” Cameron Peacock, a market analyst at IG Markets in Melbourne, wrote in a note.

The biggest stock market advance in seven decades is reducing the need for additional government stimulus measures, according to former Federal Reserve Chairman Alan Greenspan.

The S&P 500’s 64 percent jump since March made Americans richer by restoring $5.4 trillion to U.S. equities and helped spur a 1.3 percent increase in retail sales last month, data compiled by Bloomberg and the Commerce Department show.

Greece’s credit rating was cut by Standard & Poor’s and the company threatened to take further action unless Prime Minister George Papandreou tackles the European Union’s largest budget deficit. The rating was lowered by one level to BBB+ from A-, S&P said late yesterday. Fitch Ratings on Dec. 8 cut Greek debt to BBB+.

Dubai World

Concern that some countries may struggle to pay their debt was reignited after Dubai’s state-owned Dubai World said on Dec. 1 it wanted to restructure $26 billion of debt.

Barclays dropped 2.1 percent to 286 pence. Deutsche Bank, Germany’s biggest lender, fell 1.5 percent to 51.41 euros. Financial shares as a group were the biggest decliners in the MSCI Asia Pacific Index. Westpac Banking retreated 1.8 percent to A$23.17.

Shire slid 1.7 percent to 1,173 pence after the U.K. drugmaker was cut to “neutral” from “buy” at UBS.

Data from the Labor Department at 8:30 a.m. in Washington today may show 465,000 workers filed claims for unemployment insurance in the U.S. last week, down from 474,000 the prior week, according to the median economist forecast in a Bloomberg survey. During the last week of November, claims fell to a one- year low of 457,000.

The index of U.S. leading indicators probably rose for an eighth consecutive month in November, indicating economic growth will extend through the first half of 2010, economists said before a report at 10 a.m. New York time. Figures from the Fed Bank of Philadelphia at the same time may show its general economic index fell to 16 this month from 16.7 in November, marking a fifth month of factory expansion in the region.

To contact the reporter on this story: Adria Cimino in Paris at acimino1@bloomberg.net.