European Stocks, U.S. Futures Fall After Alcoa Misses Estimates

By Adria Cimino

Jan. 12 (Bloomberg) -- European stocks declined for a second day and U.S. index futures dropped after earnings from Alcoa Inc. missed analysts’ estimates. Asian shares gained.

Norsk Hydro ASA, Europe’s third-largest aluminum producer, led a drop among basic-resources companies in the Dow Jones Stoxx 600 Index, while Alcoa tumbled 6.9 percent in early New York trading. Beiersdorf AG, the German maker of Nivea skin creams, slid 2.9 percent after reporting lower-than-projected profit. Japan Airlines Corp. plunged 45 percent in Asia on speculation it will file for bankruptcy.

Europe’s Stoxx 600 fell 0.7 percent to 256.96 of 9:44 a.m. in London. Record-low interest rates in the U.S. and Europe and about $12 trillion in commitments from governments worldwide have spurred a 63 percent rally in the measure since March 9. The gauge is trading at about 59 times its companies’ reported earnings, near the highest valuation since June 2003, according to weekly data compiled by Bloomberg.

“Alcoa’s results are a reason for the market to take a breather after the gains,” said Bruno Ducros, a Paris-based fund manager at CamGestion, which oversees about $4.3 billion in stocks. “Investors are going to be very focused on earnings and that will set the trend for the market. The market can’t afford to have disappointing earnings.”

Intel Corp. and JPMorgan Chase & Co. are among U.S. companies scheduled to report results this week. Combined profit for companies in the Standard & Poor’s 500 Index surged 62 percent during the fourth quarter in the first increase since 2007, according to estimate compiled by Bloomberg survey.

U.S., Asia

U.S. stocks advanced yesterday, sending the S&P 500 higher for a sixth day. Futures on the gauge slipped 0.5 percent today, while the MSCI Asia Pacific Index rose 0.3 percent.

Alcoa posted quarterly earnings that trailed estimates as the company conducted a higher number of metals trades that boosted revenue while carrying no profit. The shares plunged 6.9 percent to $16.25 in pre-market trading.

Norsk Hydro sank 2.7 percent to 48.96 kroner. Basic- resources shares were among the worst performers among 19 industry groups in the Stoxx 600 today, dropping 1.6 percent.

Beiersdorf slid 2.9 percent to 43.88 euros. The company said 2009 profit fell about 33 percent as sales of beauty products and adhesive tapes slumped in the economic crisis. Net income dropped to 379 million euros ($550 million) from 567 million euros in 2008, the company said, citing provisional figures. That missed the 399 million-euro average of 12 analysts’ estimates compiled by Bloomberg.

Analyst Downgrades

Alstom SA, a French maker of high-speed trains and energy- generation equipment, dropped 3.3 percent to 51.94 euros after Societe Generale SA cut its recommendation on the stock to “sell” from “hold,” citing “rising competition from China” in a report to clients.

Assa Abloy AB tumbled 3.4 percent to 138.10 kronor as Goldman Sachs Group Inc. lowered its recommendation on the lockmaker to “sell” from “neutral.”

Japan Airlines, Asia’s biggest carrier, plunged to a record low. Prime Minister Yukio Hatoyama said today that shareholders should take responsibility “in general” for JAL, which has been bailed out at least three times in nine years.

Hatoyama declined to comment on the possibility of JAL being delisted when speaking to reporters today in Tokyo. The government has previously said that JAL, unprofitable in three of the last four years, will continue flying. JAL spokeswoman Sze Hunn Yap declined to comment.

Air France-KLM dropped 2.4 percent to 12.05 euros. Europe’s biggest carrier in November said it was prepared to invest in Japan Airlines. Deutsche Lufthansa AG, the region’s second- largest carrier, retreated 2.4 percent to 12.51 euros.

Tesco, Heineken

Tesco Plc climbed 2.1 percent to 426.55 pence. Sales at U.K. stores open at least a year rose 4.9 percent, excluding gasoline and adjusting for value-added tax, in the six weeks ended Jan. 9, Britain’s largest retailer said today. That compares with the prior quarter’s 2.8 percent gain and the 3 percent median estimate of 10 analysts surveyed by Bloomberg.

Heineken NV, which yesterday said it agreed to buy the beer division of Fomento Economico Mexicano SAB, added 1.6 percent to 34.55 euros after Royal Bank of Scotland Group Plc raised its recommendation on the brewer to “buy” from “hold.”

The trade deficit in the U.S. probably widened in November as imports climbed faster than exports, economists said before a report at 8:30 a.m. in Washington.

China’s central bank sold bills at a higher yield for the second time in a week, increasing the likelihood that policy makers will raise the benchmark interest rate in the first half of the year. The People’s Bank of China sold one-year bills at a yield of 1.8434 percent after last week guiding three-month rates higher.

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