Europe Futures, Asia Stocks Drop

By Lynn Thomasson and Kana Nishizawa - Feb 27, 2012 2:16 PM GMT+0700

European equity futures and Asian stocks fell amid concern that rising energy costs will hurt corporate profits. Oil snapped a seven-day winning streak after the International Monetary Fund warned of an economic slowdown.

Euro Stoxx 50 Index futures slid 0.7 percent as of 7:10 a.m. in London. The MSCI Asia Pacific Index (MXAP) lost 0.8 percent and Standard & Poor’s 500 Index futures retreated 0.3 percent. The yen advanced against all of its 16 major peers. Treasury 10-year yields fell two basis points to 1.96 percent. Oil slumped 0.5 percent to $109.19 a barrel.

The world economy is “not out of the danger zone” amid fragile financial systems, high public and private debt and rising oil prices, said International Monetary Fund Managing Director Christine in a statement after the Group of 20 meeting this weekend. Higher oil prices may push inflation in South Korea, the world’s fifth-largest oil importer, above the government’s target and have a “far-reaching” effect on the economy, said Finance Minister Bahk Jae Wan.

“The higher the oil price goes, the bigger the brake on consumers, which is concerning,” said Matt Riordan, who helps manage $6.8 billion in Sydney at Paradice Investment Management Pty. “Europe still has work to do in terms of the great bailout and there seems to be some things various parties can’t agree upon, so that’s winding down on the market at the moment.”

Debt Crisis

Officials at the G-20 meeting told Europe to come up with more financial firepower before they consider lending outside support. German lawmakers are voting today on a second bailout package for Greece and data may show U.S. pending home sales increased and Italian business confidence improved, according to Bloomberg surveys of economists.

Hyundai Motor Co., the nation’s largest automaker, dropped 3 percent. Korean Air Lines Co., the country’s biggest carrier, slid 5.3 percent. South Korea’s won dropped 0.3 percent to 1,129.24 per dollar.

Treasury 10-year yields fell for a fourth day. The Federal Reserve is scheduled to purchase as much as $5 billion of notes due from February 2018 to February 2020 today as part of its efforts to keep borrowing costs down.

Copper for delivery in three months fell as much as 0.9 percent to $8,457.25 per metric ton on the London Metal Exchange. The Standard & Poor’s GSCI Spot Index of 24 commodities capped its biggest weekly increase of the year last week, touching a nine-month high on Feb. 24.

To contact the reporters on this story: Lynn Thomasson in Hong Kong at lthomasson@bloomberg.net; Kana Nishizawa in Hong Kong at knishizawa5@bloomberg.net.

To contact the editor responsible for this story: Shelley Smith at ssmith118@bloomberg.net