Oil and metals dropped on concern the global recession is deepening, driving down commodity stocks from Royal Dutch Shell Plc to Xstrata Plc. Crude declined for a fourth day, losing 2.8 percent. Zurich-based UBS AG lowered its 2009 forecast for crude by 15 percent as the recession reduced demand. The MSCI World Index slid 0.5 percent, retreating for a third day after a four-week, 24 percent gain. The yen strengthened against the 16 most actively traded currencies. The difference in yield, or spread, between Irish and German 10-year notes widened to the most in a week after Moody’s Investors Service cut the financial-strength ratings on 12 Irish banks. Futures on the Dow Jones Industrial Average fell as much as 1.4 percent as Alcoa Inc., the largest U.S. aluminum producer, reported its second straight quarterly loss. New York-based Alcoa’s results kicked off what analysts estimate will be the seventh consecutive quarter of earnings declines for Standard & Poor’s 500 Index companies, the longest stretch since the Great Depression. “This year is going to be pretty bloody for earnings, if not into next year as well,” Hugh Young, managing director of Aberdeen Asset Management Plc’s Asian unit, said in a Bloomberg Television interview. The past month’s rally in stocks was a “dead-cat bounce,” Young said in Singapore. George Soros and Marc Faber predicted this week that the rebound will falter. Equities pared some of their drop after Bloomfield Hills, Michigan-based Pulte Homes Inc. agreed to buy Dallas-based Centex Corp. in a stock deal valued at $1.3 billion. Centex surged 16 percent to $8.81 in pre-market New York trading. Oil, Shell Oil for May delivery fell 2.8 percent to $47.77 a barrel on the New York Mercantile Exchange. Crude has dropped for four consecutive days, the longest stretch since February. A government report today is forecast to show U.S. stockpiles rose from a 15-year high last week. Shell, Europe’s largest oil company, slipped 1.3 percent to 1,463 pence. Xstrata fell 2 percent to 517.4 pence. The cost of protecting energy companies from default rose, according to traders of credit-default swaps. Contracts on Centerpoint Energy Inc., Houston’s power distributor, rose 7 to 259, CMA DataVision prices show. Copper for delivery in three months declined 1 percent to $4,335 a metric ton in London. Aluminum, nickel, zinc and lead also retreated. Gold for immediate delivery added 0.9 percent to $889.40 an ounce. Oil’s drop helped send the MSCI Emerging Markets Index down 1.6 percent to 605.77. That would be the lowest close in a week. MSCI World Rebound The MSCI World Index of 23 developed markets has advanced 20 percent since March 9 on speculation the economy may rebound and profit growth revive. The Federal Reserve last month announced plans to buy Treasuries and bonds backed by mortgages to drive down interest rates, while Treasury Secretary Timothy Geithner pledged to finance the purchase of toxic assets. For S&P 500 companies, profits probably fell 37 percent in the first quarter, according to estimates from more than 1,700 securities analysts compiled by Bloomberg. U.S. earnings may drop 31 percent in the second quarter and 18 percent in the third before gaining 76 percent in the last three months of the year, analysts predict. Alcoa fell 3 cents to $7.76 in pre-market New York trading. The aluminum producer reported a $497 million net loss as the recession reduced demand. Excluding some items, the loss was 59 cents a share, trailing the average estimate of 14 analysts for a loss of 56 cents. Sharp’s Drop Sharp Corp., Japan’s largest maker of liquid-crystal- display televisions, slumped 6.1 percent to 813 yen after the Osaka-based company posted its first annual loss since listing on the Tokyo Stock Exchange in 1956. “The euphoria has dissipated, said Suki Mann, a credit strategist at Societe Generale SA in London. “Now the fundamental story is back in focus and we realize again that the economy is in dire straits.” The yen climbed 0.9 percent to 132.10 per euro, strengthening for a second day against the European currency. The dollar rose for a third day against the euro and was at $1.3218, from $1.3272 yesterday. The spread on Irish bonds versus German debt widened 11 basis points to 215 basis points after Moody’s lowered the strength ratings on 12 banks including Bank of Ireland Plc and Irish Life & Permanent Plc on concern loan losses are increasing. The spread was 40 basis points a year ago. Ireland’s government yesterday cut its economic outlook and increased taxes and said it would take control of banks’ toxic real estate loans.

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