By Stephen Kirkland Aug. 10 (Bloomberg) -- Stocks fell the most in three weeks, U.S. index futures declined and the yen strengthened as the Federal Reserve prepared to signal whether the economy needs stimulus while concern deepened that demand in China is slowing. The MSCI World Index slipped 0.5 percent at 7:15 a.m. in New York, and Standard & Poor’s 500 Index futures lost 0.6 percent. The Shanghai Composite Index tumbled 2.9 percent for the biggest drop among world equity indexes. The yen appreciated against most of its 16 major counterparts, and the yield on the 10-year Treasury note decreased two basis points to 2.82 percent. Oil, copper and tin retreated more than 1 percent. Some investors pared bets the Fed will announce more steps to spur growth, including cutting the rate it pays on banks’ reserve deposits and adjusting the size of its balance sheet. Fed Chairman Ben S. Bernanke said last month the central bank wasn’t ready to take action in the “near term” even as the outlook for the economy remained “unusually uncertain.” China, the world’s fastest-growing major economy, said import growth and the pace of property price gains slowed in July. “The market has set itself up to expect something from the Fed and there may be some disappointment if they don’t deliver,” said Gary Jenkins, head of credit strategy at Evolution Securities Ltd. in London. The Stoxx Europe 600 Index slid 0.6 percent, led by basic- resource producers and travel companies. BHP Billiton Ltd., the world’s largest mining company, fell 2.1 percent. TUI Travel Plc, Europe’s biggest travel operator, slumped 9 percent after saying earnings will be at the lower end of forecasts. Housing Market Declines Persimmon Plc, the U.K.’s biggest homebuilder by market value, led a decline in British construction companies, dropping 3.5 percent, as a housing-market gauge from the Royal Institution of Chartered Surveyors showed the first decline in prices for a year last month. Taylor Wimpey Plc fell 2.9 percent and Barratt Developments Plc slid 2.7 percent. The pound weakened 0.9 percent to $1.5755 and depreciated 0.4 percent to 83.54 pence per euro. The decline in U.S. futures indicated the S&P 500 will pare yesterday’s 0.6 percent advance. The Federal Open Market Committee prepares to release a statement at about 2:15 p.m. in Washington. Other data today may show gains in U.S. worker productivity stalled and labor expenses climbed in the second quarter, showing companies may find it harder to keep cutting costs as the recovery unfolds, economists said. Yen, Dollar Gain The yen appreciated 0.4 percent to 113.18 per euro, while the dollar strengthened 0.5 percent against the common currency to $1.3162. Australia’s dollar fell for a second day against its U.S. counterpart, dropping 0.6 percent to 91.08 U.S. cents, after a report showed business confidence in the nation slipped in July to the lowest level in more than a year. The five-year Treasury note yield declined almost two basis points to 1.52 percent, while two-year note yields were within four basis points of a record low. The U.S. sells $34 billion of three-year notes today, the first of three auctions this week totaling $74 billion. The cost of hedging against losses on Treasuries rose for a sixth day, with credit-default swaps increasing 1 basis point to 42.8, according to data provider CMA. The contracts have risen from 36.2 on Aug. 2. The Shanghai Composite gauge fell the most in six weeks after China said imports gained 22.7 percent in July, less than the 30 percent median estimate of economists in a Bloomberg survey. Wildfires, Strikes Russia’s Micex Index sank 1.6 percent. Record heat and drought in the world’s largest energy exporter are curbing stock trading as bankers flee Moscow to escape smoke from wildfires. South Korea’s won fell for the first time in eight days after the North fired artillery near a disputed sea border, while the South African rand slumped 0.7 percent versus the dollar as most of the country’s state workers began a strike. Oil fell as much as 1.5 percent to $80.30 a barrel in electronic trading on the New York Mercantile Exchange. Copper for delivery in three months dropped 2.4 percent, and tin slipped 2.8 percent on the London Metal Exchange. To contact the reporter on this story: Stephen Kirkland in London at skirkland@bloomberg.net

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