Stocks and U.S. index futures declined, while a jump in German bunds sent yields down the most since March 2009 after Greek Prime Minister George Papandreou pledged to hold a referendum on Europe’s bailout plan. Commodities slid as China’s manufacturing growth cooled. The MSCI All-Country World Index retreated 1.9 percent at 7:20 a.m. in New York, with gauges in Germany and Italy sliding more than 4 percent. Standard & Poor’s 500 Index futures lost 2 percent. German 10-year yields fell 18 basis points to 1.84 percent. Italian bonds dropped, pushing the 10-year yield to as much as 440 basis points above benchmark bunds, a euro-era record. The euro weakened 1.3 percent to $1.3685, a three-week low. Copper slipped 3.3 percent and oil decreased 2.6 percent. German Chancellor Angela Merkel had no warning of Greece’s decision to call a vote, the Finance Ministry said late yesterday. Group of 20 leaders gather Nov. 3-4 for a summit in Cannes, France, to discuss the debt crisis. China’s manufacturing, South Korean exports and Taiwan’s economy all expanded at the slowest pace since 2009, adding to concern global economic growth may falter. “The risk of a Lehman-style disorderly default now looms a bit larger than before, including some residual risk that Greece may leave the euro zone if it rejects the offer of orderly debt relief in exchange for harsh new spending cuts and reforms,” Holger Schmieding, chief economist at Joh. Berenberg Gossler & Co. in London, wrote in a note. “This could be negative for markets for equities and other risk assets. It could exacerbate potential financial turbulence and the euro-zone recession.” Banks Retreat The Stoxx Europe 600 Index declined 3.3 percent, the biggest drop in five weeks. Greece’s ASE Index slid 6.2 percent, the most in a month. National Bank of Greece SA, Banco Comercial Portugues SA and France’s Societe Generale SA and Credit Agricole SA tumbled more than 10 percent. Credit Suisse Group AG (CSGN) sank 8 percent after the Swiss bank reported earnings that missed analysts’ estimates. Futures signaled the S&P 500 may extend yesterday’s 2.5 percent retreat. The Institute for Supply Management’s factory index is due for release at 10 a.m. New York time. The manufacturing gauge rose to 52 this month from 51.6 in September, according to the median forecast of 85 economists surveyed by Bloomberg News. Biggest Decline German 10-year yields fell by as much as 20 basis points, the biggest intraday decline since March 2009. The Belgian- German 10-year yield spread widened to a euro-era record 254 basis points. Spanish, Greek and Portuguese bonds declined. The yield on Sweden’s 10-year bond dropped 19 basis points to 1.75 percent, and Norway’s yield slid 16 basis points to 2.54 percent. Sweden and Norway aren’t part of the euro area. The euro depreciated 1.2 percent to 107.05 yen, while Japan’s currency was little changed at 78.19 per dollar. The Australian dollar weakened versus all 16 of its major peers, falling 1.6 percent to $1.0363. The cost of insuring against default on sovereign debt surged the most in almost four months with the Markit iTraxx SovX Western Europe Index of credit swaps linked to 15 governments jumping 26 basis points to 330 basis points. Contracts on Italy soared 45.5 to 491 basis points, France was up 14 at 190 and Germany climbed nine to 93 basis points. The MSCI Emerging Markets Index declined 2.3 percent, heading for the biggest two-day drop since Oct. 4. The Hang Seng China Enterprises Index slid 3.1 percent after the Purchasing Managers’ Index fell to 50.4 last month, lower than the 51.8 estimate in a Bloomberg survey of 16 economists. Benchmark stock indexes fell at least 2 percent in Russia, Turkey, Indonesia and the Czech Republic. The ruble weakened 2 percent against the dollar and South Africa’s rand slid 1.3 percent. Zinc declined 3.4 percent, leading all 24 commodities in the S&P GSCI index lower. Oil in New York dropped for a third day to $90.82 a barrel. China is the biggest energy user and largest buyer of industrial metals. To contact the reporter on this story: Stephen Kirkland in London at skirkland@bloomberg.net To contact the editor responsible for this story: Stuart Wallace at Swallace6@bloomberg.net

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