By Adam Haigh Nov. 5 (Bloomberg) -- European stocks dropped for the first time in seven days and U.S. index futures fell after disappointing results from ArcelorMittal and Carlsberg A/S overshadowed a presidential election victory for Barack Obama. ArcelorMittal, the world's biggest steelmaker, slumped 11 percent after saying it will slash production as prices tumbled. Carlsberg declined 5.1 percent as the Nordic region's largest brewer cut its outlook. BNP Paribas SA dropped 2.6 percent after the bank said third-quarter profit fell 56 percent as provisions for risky loans quadrupled. Europe's Dow Jones Stoxx 600 Index lost 2.8 percent to 226.87 as of 9:20 a.m. in London. Futures on the S&P 500 decreased 1.9 percent before a report that may show service industries in the U.S. probably shrank in October for the sixth time in 10 months. ``There is still deterioration in the profits outlook,'' said Bernd Meyer, head of pan-European equity strategy at Deutsche Bank AG in London. ``Earnings estimates from analysts are too high. The fourth quarter will be substantially weaker.'' He spoke in Bloomberg Television interview. Earnings for the 876 companies in western Europe that reported results since Oct. 7 declined 6.3 percent on average, trailing expectations by 5.8 percent, Bloomberg data show. Asian shares gained, pushing the MSCI Asia Pacific Index 4.6 percent higher, on signs that credit markets are thawing. Sweeping Victory The dollar gained against the euro on speculation Obama's victory and Democrat gains in Congress will accelerate policies aimed at overcoming a recession. Obama crossed the requisite threshold of 270 Electoral College votes needed to claim the White House when television networks declared him the winner in California. Obama will face a U.S. economy battered by falling corporate profits and the highest unemployment in five years. Concern that $680 billion in bank writedowns will halt growth pushed the S&P 500 down 17 percent last month, the most since 1987. The Institute for Supply Management's non-manufacturing index, which covers almost 90 percent of the world's largest economy, probably dropped to 47 from 50.2 in September, according to a Bloomberg survey of economists. A reading of 50 is the dividing line between growth and contraction. ``The election in the U.S. removes one uncertainty, but we have some earnings disappointments today that reminds us the economic path ahead of us won't be an easy one,'' said Lawrence Peterman, investment director at Eden Financial Ltd. in London. Stocks may extend declines after Obama's victory before picking up, if election history is any guide. Bull Market The S&P 500 slumped by 0.9 percent in the month after a Democrat wins the presidency, based on the median change of 10 victories by party since 1932, according to data compiled by Bloomberg. Still, when Democrats won for the first time, the S&P 500 recovered those losses and advanced 9.3 percent over the next 12 months. A rally in the S&P 500 may be in the offing soon after Inauguration Day in January, based on the speed of its tumble from last year's peak and the time it took stocks to gain before recessions ended in 1975, 1982 and 1991. Should the current recession be as severe as the one in the 1970s, it will last until July 2009, according to economist estimates. Given the stock market's history of anticipating economic recoveries, the S&P 500 may start its next bull market in February. In Europe, the Stoxx 600 through yesterday had climbed 19.7 percent since Oct. 27, trimming this year's loss to 36 percent, as central banks from the U.S. to Japan cut borrowing costs to revive economic growth. The European Central Bank and the Bank of England are forecast to cut rates when they meet tomorrow. Missing Estimates ArcelorMittal sank 11 percent to 21.86 after reporting third-quarter net income of $3.82 billion, missing analysts' estimates of $5.72 billion. Carlsberg dropped 5.1 percent to 244 kroner after cutting its full-year outlook. Third-quarter net income rose to 1.22 billion kroner ($210 million), missing the 1.46 billion-krone estimate of seven analysts surveyed by Bloomberg News. Wolters Kluwer NV lost 2.2 percent to 13.32 euros. Europe's largest tax and legal publisher said sales growth will be below previous guidance. BNP Paribas, France's largest bank, fell 2.6 percent to 56.995 after saying third-quarter profit slumped 56 percent as provisions for risky loans quadrupled following the collapse of Lehman Brothers Holdings Inc. Net income declined to 901 million euros ($1.17 billion), missing the 1.38 billion-euro median estimate of 13 analysts surveyed by Bloomberg. Profit to Fall Allied Irish Banks Plc slumped 13 percent to 3.7 euros. Ireland's second-largest lender by assets said full-year earnings will fall by about 72 percent on rising bad debt charges and costs related to the government's guarantee of its deposits. The Stoxx 600 is valued at 9.8 times reported earnings of the companies in the index, below the average over the past four years of 14 times profit. The gauge traded at 7.9 times earnings on Oct. 27, the lowest since at least January 2002. Q-Cells SE tumbled 11 percent to 36.2 euros after Deutsche Bank cut its recommendation to ``sell'' from ``buy,'' citing slower growth. Today's fall trims the previous five days of gains to 70 percent. To contact the reporter on this story: Adam Haigh in London at ahaigh1@bloomberg.net

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