BLBG: Europe Stocks, U.S. Index Futures Fall on Economy, Job Concerns
By Adam Haigh
Dec. 5 (Bloomberg) -- European stocks fell, extending this week’s decline, and U.S. index futures retreated as a slump in commodity prices sent metal and energy producers lower and concern deepened the global economy is worsening.
BHP Billiton Ltd. tumbled 6.4 percent as copper slumped for a seventh day. BP Plc and Total SA sank more than 5 percent as crude headed for its biggest weekly slide since March 2003. TNT NV, Europe’s second-biggest express-delivery company, dropped 5 percent as Deutsche Bank AG recommended selling the stock.
The Dow Jones Stoxx 600 Index lost 1.9 percent to 193.68 at 11:30 a.m. in London, with all 19 industry groups decreasing except for health care. A report today may show U.S. employers cut jobs last month at the fastest pace in a quarter century, pushing the world’s largest economy deeper into recession.
“The concern is depression,” said Patrick Sumner, a London-based portfolio manager at Henderson Global Investors, which has about $77.2 billion in assets under management. The situation will get worse “if the deterioration in the economy is sustained,” he told Bloomberg Television.
Futures on the Standard & Poor’s 500 Index decreased 0.3 percent. Stocks fell yesterday, pushed down by concern General Motors Corp. may file for bankruptcy and Merrill Lynch & Co.’s prediction that oil will hit $25 a barrel.
Europe’s Stoxx 600 has fallen 6.1 percent this week, paring about half of last week’s record advance, as reports signaled the global economy is worsening. The European Central Bank cut its benchmark interest rate yesterday by the most in the bank’s 10-year history after record declines in European and Chinese manufacturing and more job losses in the U.S.
Unemployment Climbs
In the U.S., payrolls shrank by 333,000 workers last month, the biggest drop since July 1982, according to the median estimate in a Bloomberg News survey. The jobless rate may have jumped to 6.8 percent, the highest level since 1993.
The cost of protecting corporate bonds from default climbed to a record ahead of the report.
“We are of course focused on non-farm payrolls which is giving us a negative skew,” said Manus Cranny, a London-based equity market analyst at MF Global. “There is a vice-like grip on the market. We have given up any ideas of an optimistic view” for stocks, he told Bloomberg Television.
More than $31 trillion has been erased from the value of global equities this year as the U.S. mortgage market collapse, freezing credit and pushing the U.S., Japan, Germany and the U.K. into recessions. Debt losses and writedowns by the world’s largest lenders and insurers have approached $1 trillion in the worst financial crisis since the Great Depression.
National Markets
National benchmarks fell in all 18 western European markets except Iceland and Ireland. The FTSE 100 lost 1.1 percent, as Royal Dutch Shell Plc and Antofagasta Plc retreated. France’s CAC 40 declined 2.7 percent, while Germany’s DAX decreased 2.5 percent.
Stocks in Europe may fall another 20 percent in the “short term” as investors grasp the possibility of deflation, Goldman Sachs Group Inc. said in a note dated today.
“Remain defensive,” strategists including Jessica Binder wrote in the report. “The start of 2009 is unlikely to bring a change in the dynamic of growth.”
The personal and household goods industry was downgraded to “underweight” from “neutral” by the brokerage, which cited weaker consumer demand. Basic-resource shares were lowered to “neutral” from “overweight” on expectations of cuts to capital expenditure and dividends.
Seven-Day Slump
BHP, the world’s largest mining company, fell 6.4 percent to 992 pence. Antofagasta, the copper producer controlled by Chile’s Luksic family, lost 4.1 percent to 372 pence.
Copper lost 4.3 percent today to $3,130 a metric ton in London. The metal for delivery in three months has fallen 17 percent in seven trading sessions.
BP, Europe’s second-largest oil producer, lost 5.1 percent to 486 pence. Shell, the region’s biggest, declined 3.9 percent to 1,596 pence, while Total, the third-largest energy company, retreated 5.9 percent to 36.83 euros.
Oil traded near a four-year low as the economic contraction and job losses in the U.S. cause a slump in fuel demand. Crude sank $3.12, or 6.7 percent, to $43.67 yesterday and rebounded 50 cents today.
TNT fell 5 percent to 14.21 euros. Deutsche Bank lowered its recommendation on the shares to “sell” from “hold” and reduced its price estimate 20 percent to 12 euros. The broker said an investor day yesterday highlighted how express volumes had declined significantly and look set to continue into 2009, London-based analyst Andy Chu wrote in a note to clients.
Berkeley Group Holdings Plc advanced 2.9 percent to 811.5 pence after the U.K.’s largest homebuilder by market value eliminated its debt and built up cash even as a housing slump cut first-half profit.
To contact the reporter on this story: Adam Haigh in London at ahaigh1@bloomberg.net
