European, U.S. Stock Futures Drop as Greece’s Government Calls Referendum

By Sarah Jones - Nov 1, 2011 2:44 PM GMT+0700

European stock futures fell, indicating the Stoxx Europe 600 Index will extend its biggest drop in four weeks, as the announcement of a Greek referendum spurred concern that the country may default. U.S. index futures and Asian shares also retreated.

Mining companies may decline with metal prices after Chinese manufacturing dropped to the lowest level since February 2009. Credit Suisse Group AG (CSGN) might retreat after the Swiss bank reported earnings that missed analysts’ estimates. Danske Bank A/S may slide after Denmark’s largest lender posted an unexpected loss. G4S Plc (GFS) might advance after the company abandoned its plan to buy ISS A/S.

Futures on the Euro Stoxx 50 Index lost 2.9 percent to 2,318 at 7:43 a.m. in London. Futures contracts on the FTSE 100 Index expiring in December retreated 2 percent as Standard & Poor’s 500 Index futures expiring the same month declined 1.3 percent. The MSCI Asia Pacific Index tumbled 1.9 percent.

“Pessimism over the outlook for resolving the European debt crisis continues to mount,” said Peter Stanhope, an institutional trader at IG Markets in Melbourne. “Greece has shocked markets with the announcement of a referendum. With more elements adding to uncertainty like this, it seems likely that the turbulent market conditions will prevail.”

European stocks slid the most since Oct. 4 yesterday, paring the Stoxx 600’s biggest monthly advance since 2009, as investors awaited details on how Europe will fund its expanded bailout facility.

Greek Bailout Referendum

U.S. stocks extended the selloff yesterday and Asian shares tumbled today after Greek Prime Minister George Papandreou called a referendum on the euro area’s latest bailout package, saying voters will give him support to proceed with economic reforms. Papandreou’s gambit risks pushing the country into default if voters reject the financial accord.

Leaders from the Group of 20 meet at a summit on Nov. 3-4 in Cannes, France, a week after the euro area’s authorities pledged to expand their rescue fund to 1 trillion euros ($1.4 trillion). The have already sought financial help from China and cooperation from the International Monetary Fund.

Copper fell for a second day in London amid speculation European leaders will struggle to rein in the debt crisis and as a report showed a drop in Chinese manufacturing.

China’s Manufacturing Index

The Purchasing Managers’ Index fell to 50.4 in October from 51.2 in September, the China Federation of Logistics and Purchasing said in a statement today. That compared with the median economist forecast of 51.8 in a Bloomberg News survey. A reading above 50 indicates expansion.

Separately, Australia’s central bank lowered its benchmark interest rate today for the first time since April 2009 as weaker global growth threatens to slow the nation’s resource- driven economy.

BHP Billiton Ltd. (BHP), the world’s largest mining company, dropped 2.7 percent to A$36.77 in Sydney trading and Rio Tinto Group, the second biggest, retreated 3 percent to A$67.15.

Credit Suisse might decline after the second-largest Swiss bank announced 1,500 more job cuts and plans to reorganize its securities unit after the division reported its first quarterly loss since 2008.

Third-quarter net income rose 12 percent to 683 million Swiss francs ($774 million), helped by an accounting gain from the widening of its credit spreads, the Zurich-based bank said. That missed the 979 million-franc mean estimate of 12 analysts surveyed by Bloomberg.

Danske Bank, G4S

Danske Bank may slide after the lender reported a third- quarter net loss of 384 million kroner ($71 million) compared with an average analyst estimate of a 763 million-kroner profit in a Bloomberg survey.

G4S may gain after terminating its planned purchase of ISS, a Danish cleaning-services company, following a revolt by the U.K. company’s shareholders.

Barclays Plc (BARC) may slip after UBS AG lowered its recommendation for the shares to “neutral” from “buy.” Britain’s second-biggest bank by assets yesterday reported a third-quarter profit that beat analysts’ estimates.

Daimler AG (DAI) might also slide after Barclays downgraded the world’s third-largest maker of luxury vehicles to “underweight” from “equal weight.”

To contact the reporter on this story: Sarah Jones in London at sjones35@bloomberg.net

To contact the editor responsible for this story: Andrew Rummer at arummer@bloomberg.net