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Jan. 28 (Bloomberg) -- Stocks retreated in Europe and Asia on concern the global economy is slowing and banks may report more losses linked to subprime mortgages. U.S. index futures dropped.
Barclays Plc and Royal Bank of Scotland Group Plc declined in London as Dresdner Kleinwort predicted more writedowns, while Mitsubishi UFJ Financial Group Inc. slid in Tokyo after Goldman, Sachs & Co. said Japan is probably in a recession. Societe Generale SA sank to a three-year low in Paris as Citigroup Inc. recommended selling the company that last week said it suffered the biggest trading fraud in banking history. Antofagasta Plc and Total SA slid as metals and oil prices retreated.
The MSCI World Index lost 0.9 percent to 1,426.62 at 9:25 a.m. in London, while Standard & Poor's 500 Index futures slipped 0.5 percent. The MSCI World has decreased 15 percent from a record high Oct. 31 on concern the slowdown and loan losses will curb profit growth.
``What's worrying us is the specter of a recession,'' said Emmanuel Soupre, who helps oversee about $15.6 billion at Neuflize Gestion in Paris. ``A few weeks ago, no one was capable of determining whether we were facing a slowdown or a recession. The more time passes, the more the ghost of a recession appears. We're convinced stocks can fall farther.''
Europe's Dow Jones Stoxx 600 Index lost 1.2 percent. France's CAC 40 slid 1.3 percent. The U.K.'s FTSE 100 sank 1 percent, and Germany's DAX retreated 1.3 percent.
European Stocks
The Stoxx 600 fell 1.6 percent last week. The measure was whipsawed during the week, posting its biggest loss since the Sept. 11 terrorist attacks on Jan. 21 and its biggest gain since 2003 Jan. 24. The Jan. 21 slump pushed the index into a bear market -- commonly defined as a 20 percent decline in a 12-month period.
``This isn't the time to go into the market,'' said William de Vijlder, chief investment officer at Fortis Investment Management in Brussels, which oversees $191 billion. ``We'll still see a lot of volatility.''
The MSCI Asia Pacific Index lost 3.1 percent, snapping a three-day, 10 percent rally. Japan's Nikkei 225 Stock Average lost 4 percent. China's CSI 300 Index slumped 6.8 percent, while Hong Kong's Hang Seng Index plunged 4.3 percent.
Barclays, the U.K.'s third-biggest bank, sank 1.5 percent to 480.25 pence. Royal Bank of Scotland, the second-largest, slid 2.4 percent to 381.75 pence.
``We expect to see larger writedowns than already announced, with Barclays and RBS most at risk,'' Dresdner wrote in a note. ``2008 looks set to be a tough year.''
Banks, Insurers
Banks and insurers have led the Stoxx 600 to a 20 percent drop since June 1 as financial companies reported more than $133 billion in losses from credit investments that failed. Banks may require another $143 billion should credit-rating firms downgrade bond insurers, analysts at Barclays Capital said Jan. 25.
Stocks retreated in the U.S. on Jan. 25 as investors weighed the effects of credit-ratings downgrades on bond insurers, a move that would erode the value of fixed-income securities.
Mitsubishi UFJ, Japan's largest publicly traded bank, slid 5.3 percent to 985 yen. Sumitomo Mitsui Financial Group Inc., the second-biggest, dropped 5.3 percent to 799,000 yen.
Japan's economy probably entered a recession amid ``a slump in domestic demand,'' Tetsufumi Yamakawa, Goldman Sachs' chief Japan economist, said in a report today. Factory production will fall from a fourth-quarter peak, while consumer spending and the construction industry are both slowing, the economist said.
U.S. Slowdown
A U.S. government report due on Jan. 30 is expected to show growth weakened to a 1.2 percent annual rate from October to December, a quarter of the previous three months' pace, according to a Bloomberg survey of economists.
The U.S. Federal Reserve last week cut lending rates by 0.75 percentage point, the biggest reduction in 23 years, to avert an economic recession and as equities tumbled worldwide. Interest- rate futures show traders expect the Fed will cut rates by an additional half percentage point Jan. 30.
Societe Generale slid 7.2 percent to 68.55 euros, the lowest since August 2004. The French bank that last week said it suffered the biggest trading fraud in banking history, was cut to ``sell' from ``buy'' at Citigroup. France's second-biggest bank by market value has been ``severely impaired'' by the 4.9 billion-euro ($7.2 billion) loss caused by a rogue trader, Citigroup said.
The brokerage cut its price estimate on the shares to 65 euros from 130 euros apiece, implying a possible decline of 12 percent from current levels.
Antofagasta, the copper producer controlled by Chile's Luksic family, retreated 2.8 percent to 633.5 pence. Total, Europe's biggest oil refiner, tumbled 2.2 percent to 48.86 euros.
Metals Prices
Copper, lead, nickel and zinc fell in London. Crude oil declined from a one-week high in New York.
Nokia Oyj slid 2.4 percent to 23.63 euros. Morgan Stanley lowered its share-price estimate for the world's largest mobile phone maker to 27 euros from 30. ``The one risk we see is a meaningful slowdown in Europe, which accounts for a quarter of volume,'' London-based analyst Adnaan Ahmad wrote in a note.
JPMorgan Chase & Co. also cut its price projection to 27 euros from 30. The valuation of the industry has fallen, analysts including London-based Rod Hall wrote to clients, and said their 2008 earnings estimate is now ``well below'' its peers.
Fortis climbed 6.9 percent to 14.17 euros. Belgium's biggest financial-services company said yesterday it meets capital and solvency requirements even when its holdings in subprime collateralized debt obligations are valued under ``very stringent scenarios.''
The shares tumbled 10 percent Jan. 25 on concern the Brussels-based company would have to sell new shares to strengthen its capital, traders said.
``There's a lot of nervousness and volatility in the market,'' said Chicuong Dang, an analyst at Richelieu Finance in Paris. ``There are still fears of writedowns by banks.''
Schibsted ASA slumped 13 percent to 162.5 kroner. Norway's biggest media company said that it had one-off items of as much as 70 million kroner ($13 million) in the fourth quarter and that there will be additional restructuring costs in period.
http://www.bloomberg.com/apps/news?pid=20601087&sid=aEBZ2A7eht0o&refer=home
Barclays Plc and Royal Bank of Scotland Group Plc declined in London as Dresdner Kleinwort predicted more writedowns, while Mitsubishi UFJ Financial Group Inc. slid in Tokyo after Goldman, Sachs & Co. said Japan is probably in a recession. Societe Generale SA sank to a three-year low in Paris as Citigroup Inc. recommended selling the company that last week said it suffered the biggest trading fraud in banking history. Antofagasta Plc and Total SA slid as metals and oil prices retreated.
The MSCI World Index lost 0.9 percent to 1,426.62 at 9:25 a.m. in London, while Standard & Poor's 500 Index futures slipped 0.5 percent. The MSCI World has decreased 15 percent from a record high Oct. 31 on concern the slowdown and loan losses will curb profit growth.
``What's worrying us is the specter of a recession,'' said Emmanuel Soupre, who helps oversee about $15.6 billion at Neuflize Gestion in Paris. ``A few weeks ago, no one was capable of determining whether we were facing a slowdown or a recession. The more time passes, the more the ghost of a recession appears. We're convinced stocks can fall farther.''
Europe's Dow Jones Stoxx 600 Index lost 1.2 percent. France's CAC 40 slid 1.3 percent. The U.K.'s FTSE 100 sank 1 percent, and Germany's DAX retreated 1.3 percent.
European Stocks
The Stoxx 600 fell 1.6 percent last week. The measure was whipsawed during the week, posting its biggest loss since the Sept. 11 terrorist attacks on Jan. 21 and its biggest gain since 2003 Jan. 24. The Jan. 21 slump pushed the index into a bear market -- commonly defined as a 20 percent decline in a 12-month period.
``This isn't the time to go into the market,'' said William de Vijlder, chief investment officer at Fortis Investment Management in Brussels, which oversees $191 billion. ``We'll still see a lot of volatility.''
The MSCI Asia Pacific Index lost 3.1 percent, snapping a three-day, 10 percent rally. Japan's Nikkei 225 Stock Average lost 4 percent. China's CSI 300 Index slumped 6.8 percent, while Hong Kong's Hang Seng Index plunged 4.3 percent.
Barclays, the U.K.'s third-biggest bank, sank 1.5 percent to 480.25 pence. Royal Bank of Scotland, the second-largest, slid 2.4 percent to 381.75 pence.
``We expect to see larger writedowns than already announced, with Barclays and RBS most at risk,'' Dresdner wrote in a note. ``2008 looks set to be a tough year.''
Banks, Insurers
Banks and insurers have led the Stoxx 600 to a 20 percent drop since June 1 as financial companies reported more than $133 billion in losses from credit investments that failed. Banks may require another $143 billion should credit-rating firms downgrade bond insurers, analysts at Barclays Capital said Jan. 25.
Stocks retreated in the U.S. on Jan. 25 as investors weighed the effects of credit-ratings downgrades on bond insurers, a move that would erode the value of fixed-income securities.
Mitsubishi UFJ, Japan's largest publicly traded bank, slid 5.3 percent to 985 yen. Sumitomo Mitsui Financial Group Inc., the second-biggest, dropped 5.3 percent to 799,000 yen.
Japan's economy probably entered a recession amid ``a slump in domestic demand,'' Tetsufumi Yamakawa, Goldman Sachs' chief Japan economist, said in a report today. Factory production will fall from a fourth-quarter peak, while consumer spending and the construction industry are both slowing, the economist said.
U.S. Slowdown
A U.S. government report due on Jan. 30 is expected to show growth weakened to a 1.2 percent annual rate from October to December, a quarter of the previous three months' pace, according to a Bloomberg survey of economists.
The U.S. Federal Reserve last week cut lending rates by 0.75 percentage point, the biggest reduction in 23 years, to avert an economic recession and as equities tumbled worldwide. Interest- rate futures show traders expect the Fed will cut rates by an additional half percentage point Jan. 30.
Societe Generale slid 7.2 percent to 68.55 euros, the lowest since August 2004. The French bank that last week said it suffered the biggest trading fraud in banking history, was cut to ``sell' from ``buy'' at Citigroup. France's second-biggest bank by market value has been ``severely impaired'' by the 4.9 billion-euro ($7.2 billion) loss caused by a rogue trader, Citigroup said.
The brokerage cut its price estimate on the shares to 65 euros from 130 euros apiece, implying a possible decline of 12 percent from current levels.
Antofagasta, the copper producer controlled by Chile's Luksic family, retreated 2.8 percent to 633.5 pence. Total, Europe's biggest oil refiner, tumbled 2.2 percent to 48.86 euros.
Metals Prices
Copper, lead, nickel and zinc fell in London. Crude oil declined from a one-week high in New York.
Nokia Oyj slid 2.4 percent to 23.63 euros. Morgan Stanley lowered its share-price estimate for the world's largest mobile phone maker to 27 euros from 30. ``The one risk we see is a meaningful slowdown in Europe, which accounts for a quarter of volume,'' London-based analyst Adnaan Ahmad wrote in a note.
JPMorgan Chase & Co. also cut its price projection to 27 euros from 30. The valuation of the industry has fallen, analysts including London-based Rod Hall wrote to clients, and said their 2008 earnings estimate is now ``well below'' its peers.
Fortis climbed 6.9 percent to 14.17 euros. Belgium's biggest financial-services company said yesterday it meets capital and solvency requirements even when its holdings in subprime collateralized debt obligations are valued under ``very stringent scenarios.''
The shares tumbled 10 percent Jan. 25 on concern the Brussels-based company would have to sell new shares to strengthen its capital, traders said.
``There's a lot of nervousness and volatility in the market,'' said Chicuong Dang, an analyst at Richelieu Finance in Paris. ``There are still fears of writedowns by banks.''
Schibsted ASA slumped 13 percent to 162.5 kroner. Norway's biggest media company said that it had one-off items of as much as 70 million kroner ($13 million) in the fourth quarter and that there will be additional restructuring costs in period.
http://www.bloomberg.com/apps/news?pid=20601087&sid=aEBZ2A7eht0o&refer=home
