Stocks fell around the world, the yen and the dollar strengthened and bonds rose amid concern China’s growth will cool and U.S. earnings will disappoint. The MSCI World Index dropped 0.9 percent at 9:59 a.m. in New York. The Standard & Poor’s 500 Index slipped 0.7 percent after closing at a five-month high yesterday. The yen appreciated against all but one of its 16 most-traded counterparts, and the Dollar Index advanced as much as 0.6 percent, its biggest gain in a month. The 10-year U.S. Treasury yield declined 4 basis points to 2.36 percent. Oil and copper slipped for a second day. Policy makers from the Federal Reserve’s Janet Yellen to the Bank of England’s David Miles suggested government efforts to boost economic growth are limited. China lifted reserve requirements for six lenders, stepping up efforts to cool the fastest-growing major economy. Posco, the world’s third-largest steelmaker, cut its full-year profit forecast after earnings declined in the third quarter. “Investors will likely worry about two key reported items out of Posco,” said Steven Neimeth, a money manager at SunAmerica Asset Management in Jersey City, New Jersey, which oversees $41 billion. “It appears their outlook for revenues has slowed, suggesting economic growth out of Asia may be slowing. More importantly, inflation in their raw materials prices appears to be moving up at a fairly dramatic pace, crimping operating profits.” Fed Minutes U.S. stocks rose yesterday amid speculation the Fed will pump more cash into the economy to protect the recovery. The S&P 500 last month climbed 8.8 percent, its best September since 1939, as the central bank said it’s willing to ease monetary policy further. Minutes of the Fed’s September meeting on interest rates are scheduled for release at 2 p.m. in Washington. The Stoxx Europe 600 Index lost 0.4 percent. BHP Billiton, the world’s largest mining company, slid 1.4 percent. France’s CAC 40 sank 0.9 percent for the biggest decline among 18 western European markets as workers demonstrated against the government’s overhaul of the pension system. The MSCI Asia Pacific Index fell 1.3 percent, the biggest drop in a month, as commodity companies declined. The MSCI Emerging Markets Index slipped 0.8 percent, with benchmark equity gauges in South Korea, Taiwan, the Philippines and the Czech Republic losing more than 1 percent. The Shanghai Composite Index rallied for a third day, as gains by commodity shares offset declines by banks. Earnings Season U.S. stocks opened lower as Intel Corp. and CSX Corp. prepare to report results after the close of trading in New York today. Earnings growth for companies in the S&P 500 will probably slow to 23 percent in the third quarter, compared with a 48 percent increase in the previous quarter, according to data compiled by Bloomberg. “Investors are highly anticipating earnings out of Intel and JPMorgan,” said Neimeth. “In the past two weeks, we’ve seen downgrades of semiconductor companies that makes investors nervous about the next two quarters, which are the critical back-to-school and Christmas quarters.” JP Morgan Chase & Co. said in a note dated Oct. 8 that it expects Intel’s third-and fourth-quarter earnings per share will fall short of estimates. Consumer demand may cause Intel and Advanced Micro Devices Inc. to lower fourth-quarter earnings guidance and experience rising levels of inventory, JPMorgan said in the note. Novellus Systems Inc. was lowered to “sell” from “hold” Oct. 8 at Deutsche Bank by analyst Peter Kim. Stocks and bonds have rallied on expectations that the Fed will increase purchases of government debt to strengthen the recovery, a tactic known as quantitative easing. ‘Excessive Risk Taking’ “It is conceivable that accommodative monetary policy could provide tinder for a buildup of leverage and excessive risk-taking in the financial system,” the Fed Vice Chairman Yellen said in a speech in Denver yesterday. Bank of England policy maker Miles, speaking in Dublin today, said officials must not withdraw stimulus too soon. The yen appreciated 0.8 percent to 112.93 per euro and 0.3 percent to 81.80 per dollar, near the 15-year high of 81.39 against the U.S. currency reached yesterday. The pound dropped 0.5 percent to $1.5809 after a report showed U.K. inflation exceeded the government’s 3 percent limit for a seventh month in September. The Australian dollar weakened 0.4 percent to 98.04 U.S. cents, and depreciated 0.7 percent to 80.14 yen. European Bonds The yield on the German 10-year bond lost 4 basis points to 2.23 percent. The Dutch 10-year bond’s yield dropped 3 basis points to 2.45 percent as the Netherlands sold 1.82 billion euros of securities maturing in 2042 at an average yield of 2.913 percent, according to the Treasury. Greece issued 1.17 billion euros of 26-week bills at a yield of 4.54 percent, down from 4.82 percent at a Sept. 14 auction. Italy offered 6.5 billion euros of 12-month bills at an average yield of 1.441 percent, up from 1.428 percent at a sale a month ago. Belgium plans to sell three- and 12-month debt today. The U.S. two-year note yield dropped was little changed at 0.343 percent, after touching a record low of 0.3270 percent before the government sells $32 billion of three-year notes, the first of three planned auctions this week. Copper declined 1 percent to $3.75 a pound on the Comex in New York. Raw sugar futures led commodities lower, falling 2 percent to 26.05 cents a pound, the first drop in four days. Crude oil slipped 1.1 percent to $81.29 a barrel. To contact the reporter on this story: Stephen Kirkland in London at skirkland@bloomberg.net To contact the editor responsible for this story: Nick Baker at nbaker7@bloomberg.net.

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