By Nikolaj Gammeltoft and Kelly Bit June 4 (Bloomberg) -- U.S. and European stocks and commodities slid, while Treasuries rallied, as slower-than- estimated American job growth and a worsening government debt crisis fueled concern the global economic recovery will slow. Hungary’s forint sank 2.3 percent. The Standard & Poor’s 500 Index tumbled 1.6 percent, erasing its weekly gain, and the Stoxx Europe 600 Index lost 1.3 percent at 9:42 a.m. in New York. Oil fell 1.8 percent, while copper, nickel and tin sank at least 2.5 percent. The yield on the 10-year Treasury note decreased 11 basis points to 3.26 percent and the Dollar Index, which gauges the currency against six major trading partners, jumped to the highest level since March 2009 on demand for safer assets. The forint tumbled for a second day on concern Hungary may default on its debt. Private U.S. payrolls, which don’t include government census hirings, rose a less-than-forecast 41,000 in May and Americans dropped out of the labor force, showing a lack of confidence in the recovery. The euro slumped to a four-year low near $1.20 amid concern the debt crisis will worsen after a spokesman for Hungarian Prime Minister Viktor Orban said his nation’s economy is in a “very grave situation” and press reports fueled speculation of trading losses at French bank Societe Generale SA. “If the worker is not going back to work, then the question becomes whether earnings estimates for the second half of this year are too high, and if they are too high, is the market priced appropriately?” said Stephen Wood, who helps manage $176 billion as chief market strategist for Russell Investments in New York. “There’s a tug of war between a sloppy economic recovery and some very negative headline news. The rest of 2010 is going to be choppier.” Valuation Watch Profits for companies in the S&P 500 are forecast to rise 17 percent to a combined $81.34 a share in 2010, according to estimates from more than 2,000 analysts tracked by Bloomberg. That implies a price-earnings ratio of 13.5, compared with an average multiple of 20.4 over the previous two decades, data show. Forecasts for the U.S. economy to expand 3.2 percent this year and 3.1 percent in 2011 incorporate estimates that the jobless rate will decline to 9.6 percent by the end of 2010 and 9 percent a year later. “Stock valuations are low and on the back of this report we might conclude that they should be justifiably more low,” said Barry Knapp, the head of U.S. equity strategy at Barclays Plc. “We should be adding 250,000-300,000 jobs a month and we’re not doing that. I don’t think any strategists are about to adjust their earnings estimates because of this but forward estimates are probably too high as we get into 2011.” European Stocks The Stoxx 600 fell for the first time in five days. Banco Santander SA, Spain’s biggest lender, fell 5.5 percent in Madrid. Societe Generale slumped 7.4 percent in Paris. France’s second-biggest bank by market value is telling analysts that it didn’t suffer losses on derivatives, said two people familiar with the matter who declined to be identified. Societe Generale declined to comment on Reuters and CNBC reports today that cited speculation the bank may face derivatives losses. “If we had something to say, we would have already communicated,” said Laura Schalk, a spokeswoman for the Paris-based bank. The MSCI World Index of stocks in 24 developed nations fell 1.8 percent. Most shares in Asia fell before the U.S. jobs data, sending the MSCI Asia Pacific Index down 0.2 percent. Mining companies declined in Asia after the world’s two largest copper producers, Codelco and Freeport-McMoran Copper & Gold Inc., said China’s plans to curb growth will lower demand for the metal. Baoshan Iron & Steel Co. fell 1.1 percent after Shanghai Securities News said the company will cut prices. Hynix Semiconductor Inc. rallied 6 percent in Seoul on a credit-rating upgrade and higher memory-chip prices. To contact the reporters on this story: Nikolaj Gammeltoft in New York at ngammeltoft@bloomberg.net; Kelly Bit in New York at kbit@bloomberg.net.

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