By Adria Cimino
Feb. 12 (Bloomberg) -- Stocks in Europe and Asia slipped and U.S. index futures fell as companies from Electricite de France SA to Diageo Plc posted disappointing results and investors speculated U.S. measures won’t revive the global economy.
EDF, the biggest operator of nuclear reactors, and Diageo, the largest liquor maker, sank more than 7 percent. Mitsubishi UFJ Financial Group Ltd. lost 3.5 percent as U.S. Treasury Secretary Timothy Geithner said he needs time to work out details of a bank-rescue plan. Wells Fargo & Co. helped lead declines in the U.S. after American jobless claims climbed to a record. Treasuries rose for a fourth day, while gold traded near a six- month high in London as investors sought a haven as the economy deteriorates.
The MSCI World Index dropped for a third day, losing 0.7 percent at 1:58 p.m. in London. The gauge of 23 developed countries had rallied 5.8 percent in the previous five days on optimism that global stimulus packages, a financial-rescue plan from Barack Obama’s administration and interest-rate cuts would help lift the U.S., Europe and Japan out of recessions.
“There isn’t a miracle solution,” Sebastien Korchia, a fund manager at Meeschaert Asset Management in Paris, which oversees about $2.6 billion, said in a Bloomberg Television interview. “It will take time. The market is worried.”
European stocks and U.S. futures maintained losses after government data showed the total number of Americans collecting unemployment benefits reached 4.81 million. Sales at U.S. retailers rose in January for the first time in seven months.
The MSCI Emerging Markets Index of 23 developing nations sank 1.5 percent. India’s Bombay Stock Exchange Sensitive Index slipped 1.6 percent, while China’s Shanghai Composite Index fell 0.6 percent. Russia’s Micex Index decreased 0.2 percent.
BRICs Outperform
Even with today’s drops, China and Russia, along with Brazil, are the only major stock markets recording gains of more than 8 percent this year. India, the fourth member of the so- called BRICs, is down 1.9 percent.
U.S. stocks gained yesterday as lawmakers debated a $789 billion plan to revive the economy. U.S. House and Senate lawmakers agreed on a compromise late yesterday, a smaller bill than originally approved by both groups.
Governments worldwide are attempting to stabilize a global economy battered by more than $1 trillion in writedowns and losses at financial companies with stimulus programs and bank support packages. Australia’s Senate today rejected a A$42 billion ($28 billion) stimulus package aimed at preventing the country’s first recession in 18 years after an independent lawmaker demanded increased spending for his constituency.
Europe’s Dow Jones Stoxx 600 Index slid 1.2 percent as all 19 industry groups except healthcare declined. The MSCI Asia Pacific Index lost 1.8 percent as Daikin Industries Ltd. cut its profit forecast.
Futures, Obama
Futures on the Standard & Poor’s 500 Index lost 1 percent.
Treasury 10-year notes rose on speculation the government’s stimulus plan may not be enough to turn the economy around. The yield on the 10-year note fell 0.03 percentage point to 2.77 percent, according to BGCantor Market Data. Bullion for immediate delivery gained as much as 0.8 percent to $946.38 an ounce.
Obama’s stimulus plan will be insufficient to avert the biggest U.S. economic decline since 1946 as consumer spending posts its longest slide on record, according to a monthly Bloomberg News survey. The world’s largest economy will contract 2 percent this year, half a percentage point more than last month’s forecast, according to the survey.
‘Very Cautious’
Profits have declined 65 percent for 469 companies in western Europe that have released earnings since Jan. 12, according to Bloomberg data.
“Few companies have visibility on profit or sales,” Jean- Christophe Liard, an analyst at KBL Richelieu Gestion, which oversees $5.2 billion, said in a Bloomberg Television interview from Paris. “Reports are showing either a drop in margins or slowing sales. These reports are a reflection of what’s going on in the economy. We’re very cautious.”
EDF slid 7.4 percent to 32.93 euros after saying 2008 net income fell to 3.4 billion euros ($4.39 billion) because of costs associated with regulated power rates and lower industrial demand amid the economic slowdown.
Diageo slipped 4.5 percent to 867 pence. The company said full-year operating profit will rise 4 percent to 6 percent, less than a previous forecast for as much as 9 percent growth.
Mitsubishi UFJ fell 3.5 percent to 468 yen in Tokyo. Toyota Motor Corp., which makes 37 percent of its sales in North America, dropped 2.9 percent to 3,050 yen. Wells Fargo, the second-biggest U.S. home lender, slid 3.7 percent to $16.86.
Daikin, Rexel
Daikin, the biggest Japanese maker of air conditioners, fell 5.6 percent to 2,105 yen after cutting its profit forecast by 59 percent for the year ending March 31 as the slumping global economy hurt sales.
Rexel SA lost 8.4 percent to 4.70 euros. The world’s largest distributor of electrical equipment posted a 63 million-euro net loss for the fourth quarter, hurt by falling volume sales and a drop in the price of copper.
Rexel said it expects a “significant” drop in volume sales and prices in 2009, suspended its dividend and said it will cut operating investments by 25 percent.
Nexans SA sank 13 percent to 40.17 euros. The world’s biggest maker of cables and wires said 2008 profit fell to 82 million euros from 189 million euros the year before.
Swiss Reinsurance Co. surged 4.7 percent to 19.83 francs. The world’s second-biggest reinsurer said Jacques Aigrain resigned as chief executive officer after record losses forced the company to seek capital from investors including Warren Buffett.
Cap Gemini
Cap Gemini SA lost 6.8 percent to 26.36 euros. Europe’s largest computer-services company said 2008 profit rose 2.5 percent to 451 million euros, missing analysts’ estimates, and predicted first-half sales will drop.
Renault SA advanced 2.9 percent to 16.71 euros. France’s second-largest carmaker reported a wider-than-expected second- half loss on Europe’s biggest auto market slump in 15 years and pledged to deepen cost cuts as the situation worsens in 2009.
“The most striking feature of Renault’s release is its aim for positive cash flow in 2009,” said London-based Credit Suisse analyst Stuart Pearson, who has an “underperform” rating on the shares. “This statement alone will significantly support the stock.”
Smith & Nephew Plc rose 4.8 percent to 537.5 pence after Europe’s largest maker of shoulder and knee implants said fourth- quarter operating profit increased and that long-term demand was “favorable.”
Fortis, Commerzbank
Fortis dropped 15 percent to 1.12 euros after shareholders yesterday rejected the state-organized breakup of what was once Belgium’s largest financial-services company.
Commerzbank AG slid 4.5 percent to 3.51 euros. The stock was cut to “underweight” from “equal weight” by analysts at Morgan Stanley. A “lack of visibility on financials, including Dresdner and the operating environment” were cited by Morgan Stanley as reasons for the downgrade in a note to investors.
Viacom Inc., owner of MTV, Comedy Central and Nickelodeon, said fourth-quarter profit excluding some items was 76 cents a share. Analysts surveyed by Bloomberg estimated 79 cents. The stock didn’t trade in Europe.
Earnings at the 349 companies in the S&P 500 that have reported fourth-quarter results fell 36 percent on average as firms from Microsoft Corp. to Procter & Gamble Co. disappointed investors and the economy shrank at the fastest pace in 26 years. The period is projected to be the sixth straight quarter of decreasing profits, the longest streak on record.
To contact the reporter on this story: Adria Cimino in Paris at acimino1@bloomberg.net.
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