By Claudia Carpenter June 8 (Bloomberg) -- European stocks fell for the third day and the pound weakened after Fitch Ratings said Britain’s deficit challenge is “formidable,” adding to concerns that the region’s fiscal crisis is spreading. U.S. futures climbed and copper and oil erased gains, while gold rose to a record. The Stoxx Europe 600 Index slipped 1 percent at 11:29 a.m. in London, dragged down by E.ON AG and Tesco Plc shares. Futures on the Standard & Poor’s 500 Index rose 0.2 percent. Sterling weakened 0.4 percent to $1.4412. Copper fell 0.3 percent, and oil retreated 0.7 percent. Gold advanced as much as $11.86, or 1 percent, to a record $1,252.11 an ounce. Fitch said the U.K. needs to accelerate plans to reduce its budget deficit. The warning came one day after Prime Minister David Cameron told Britons to expect years of spending cuts, while the European Union pledged tougher sanctions on governments that break deficit rules. “This is not a pretty environment for equity investors,” Dennis Gartman, economist and editor of “The Gartman Letter” said in a Bloomberg radio interview. “Prices are going to continue to move lower. We are revising down ‘guestimates’ for earnings. It’s the start of a bear market.” E.ON and RWE, Germany’s biggest utilities, dropped more than 3 percent in Frankfurt after Germany signaled plans for levies on the nuclear power industry. BP Retreats BP Plc retreated 3 percent in London as the commander of the U.S. response team to the leaking Gulf of Mexico well said it’s still unknown how much crude continues to spill. Tesco, the U.K.’s biggest retailer, fell 2.4 percent after saying Chief Executive Officer Terry Leahy will retire next year. Asian stocks rose for the first time in three days after Federal Reserve Chairman Ben S. Bernanke said the U.S. recovery remains intact. The MSCI Asia Pacific Index gained 0.3 percent. Hyundai Motor Co., which gets 13 percent of its sales in North America, climbed 3 percent in Seoul. Newcrest Mining Ltd., Australia’s largest gold producer, jumped 2.9 percent in Sydney. Softbank Corp., which has a monopoly on Japanese sales of Apple Inc.’s iPhone device, rose 2.3 percent in Tokyo after the U.S. company unveiled a new model yesterday. Developing-nation shares fell for a third day, sending the MSCI Emerging Markets Index of 21 countries down 0.1 percent. Russia’s Micex Index slumped 1.4 percent on lower oil. Gauges in the Turkey, the Czech Republic, Hungary and Romania lost more than 1 percent. S&P 500 Slump The gain in U.S. futures followed the S&P 500’s 1.4 percent slump yesterday. The benchmark gauge has fallen 14 percent from its April 23 high to the lowest level since November, trimming its valuation to about 15 times the reported earnings of its companies, the cheapest in almost a year, according to Bloomberg data. The recovery in the world’s largest economy is “moderate- paced,” although unemployment may remain high, Bernanke said yesterday. The U.S. has supplanted China and Brazil as the most attractive market for investors, according to a global quarterly poll of investors and analysts who are Bloomberg subscribers. Investors aren’t “completely convinced” problems are solved, Bernanke said. The pound weakened against all 16 of its most-traded counterparts, with the biggest declines against the Australian and Canadian dollars and retreating 0.3 percent to 82.67 pence per euro. The yen depreciated as much as 0.6 percent to 91.93 per dollar before rebounding to trade little changed. The euro was little changed at $1.1919, compared with yesterday’s four-year low of $1.1877. Europe’s 750 billion-euro ($900 billion) aid package might fail to save the 11-year-old monetary union and usher in an “extended period” of market stress and disorder, Royal Bank of Scotland Group Plc said today. Copper fell $21 to $6,080 a metric ton on the London Metal Exchange, extending its decline for a seventh day, the longest losing streak since December 2008. Crude oil for July delivery dropped for a third day, falling to $70.96 a barrel in electronic trading on the New York Mercantile Exchange. To contact the reporter on this story: Claudia Carpenter in London at ccarpenter2@bloomberg.net

Source