By Sarah Thompson Nov. 20 (Bloomberg) -- European stocks slumped, sending the Dow Jones Stoxx 600 Index to the lowest level since 2003, on concern bank losses will increase and corporate profits will crumble as the recession spreads. Deutsche Bank AG and ING Groep NV dropped more than 9 percent after Citigroup Inc.'s plan to buy troubled investment-fund assets fueled speculation of more bank writedowns. Copper declined for a third day and oil slid below $50 a barrel, sending commodity producers lower. Europe's Dow Jones Stoxx 600 Index declined 4.1 percent to 185.82, the lowest since April 2003, at 2:42 p.m. in London. More than $32 trillion has been erased from the value of global equities this year as the financial-market turmoil pushes countries from Europe to the U.S. and Japan into recession. ``We're seeing a total collapse of trust in everything fundamental,'' said Espen Furnes, an Oslo-based fund manager at Storebrand Asset Management, which has the equivalent of $48 billion. ``There are no buyers in sight. This year will go down in history.'' National benchmark indexes retreated in all of the 18 western European markets. The U.K.'s FTSE 100 lost 3.3 percent. Germany's DAX slid 3.6 percent. France's CAC 40 sank 4.4 percent. Declines in emerging markets surpassed developed countries on concern lower metal and near $50-a-barrel oil will cripple their economies. Russia's Micex Index sliding as much as 9 percent before trading was interrupted for an hour. Russia is the world's largest energy supplier. Turkey's announcement that it may get a bailout of between $20 billion and $40 billion from the International Monetary Fund helped limit losses, with the ISE National 100 index falling only 3.8 percent. The lira rose against the dollar. `Bleak Picture' Federal Reserve policy makers lowered forecasts for U.S. economic growth and employment in 2009, saying the outlook has ``worsened significantly'' since June, according to Fed records released yesterday. The U.S. economy will contract through the middle of next year, and the unemployment rate is projected to be 7.1 percent to 7.6 percent in 2009, they said. ``The Fed painted a very bleak picture of the U.S. economy and with corporate profitability continuing to come under pressure, it's a pretty gruesome mix of negativity out there,'' said Henk Potts, a London-based fund manager at Barclays Stockbrokers, which has about $45 billion under management. The Stoxx 600 has fallen 49 percent in 2008, headed for its worst year since records began in 1987, as writedowns and credit losses topped $966 billion in the worst financial crisis since the Great Depression. Deutsche Bank Deutsche Bank, Germany's biggest, dropped 10 percent to 19.215 euros. ING, the largest Dutch financial-services provider, slipped 9.4 percent to 5.69 euros. Citigroup tumbled 23 percent yesterday to a 13-year low on a plan to buy $17.4 billion of troubled investment-fund assets. The value of the assets it agreed to purchase from structured investment vehicles it advises fell from $21.5 billion as of Sept. 30, reflecting market declines of $1.1 billion and $3 billion in debt that matured or was sold, the bank said. SIVs, which Citigroup invented in 1988, emerged 15 months ago as one of the first major strains in credit markets rocked by record high foreclosures on subprime mortgages. Citigroup has posted $65.7 billion in credit-related losses, the most after Wachovia Corp., with $96.5 billion, according to data compiled by Bloomberg. Analysts forecast earnings for financial firms in the Stoxx 600 will drop 48 percent this year, compared with a 10 percent decline for the overall market. Commodities Slump Royal Dutch Shell Plc, Europe's largest oil company, lost 3.1 percent to 1,544 pence. Total SA, the region's third-largest, retreated 3.1 percent to 37.86 euros. Crude for December delivery fell as much as $3.71, or 6.9 percent, to $49.91 a barrel in New York, dropping below $50 for the first time in almost two years. Rio Tinto Group, the world's third-largest mining company, dropped 4.2 percent to 2,163 pence. BHP Billiton Ltd., the biggest, slid 4.1 percent to 790 pence. Copper fell as much as 3.5 percent to $3,464 a ton in London on concern supply may outpace demand as a global economic slowdown damps demand for raw materials. Air France-KLM Group slipped 5.5 percent to 9.495 euros. Europe's biggest airline said fiscal second-quarter profit declined 49 percent because of high fuel costs and after a year- earlier gain from the sale of assets. The airline predicted operating income ``clearly in profit'' for the full year. Asset Managers Asset managers tumbled after UBS AG recommended selling the shares. Aberdeen Asset Management Plc dropped 2.4 percent to 81 pence, and BlueBay Asset Management Plc tumbled 17 percent to 112 pence. UBS initiated coverage of Aberdeen and BlueBay with ``sell'' recommendations. Royal Ahold NV climbed 7.3 percent to 8.58 euros. The owner of Stop & Shop supermarkets in the U.S. reported third-quarter profit that beat analysts' estimates as the company lured more customers to its stores with lower prices and private-label goods. Oriflame Cosmetics SA slid 8 percent to 206 kronor after Merrill Lynch & Co. lowered its recommendation on the seller of natural makeup in more than 50 countries to ``underperform'' from ``buy.'' ``The black cloud hanging over Oriflame from the Russian crisis'' and the potential devaluation of the ruble ``will remain until more unknowns are known,'' London-based analysts including Nicolas Sochovsky wrote to clients. To contact the reporter on this story: Sarah Thompson in London at sthompson17@bloomberg.net.

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