Stocks (MXAP) dropped for the first time in seven days after Standard & Poor’s put 15 European nations on watch for potential ratings downgrades. Metals retreated and the euro fell against the dollar. The MSCI All Country World Index fell 0.7 percent as of 8:02 a.m. in London, after rallying 9.4 percent in the last six sessions. The Stoxx Europe 600 Index slumped 0.6 percent and futures on the Standard & Poor’s 500 Index dropped 0.4 percent. Copper declined 1.8 percent, snapping two days of gains. Oil slid 0.4 percent to $100.57 a barrel. French and German 10-year bonds retreated. “There’s concern deficits will worsen in European countries such as Italy and Spain, and that will prompt a downgrade of ratings for government bonds,� said Fumiyuki Nakanishi, a strategist at SMBC Friend Securities Co. in Tokyo. Germany, France and four other nations may lose their AAA credit ratings depending on the result of a summit of European Union leaders on Dec. 9, S&P said yesterday. Fitch Ratings said a property-price correction in China will lead to loan portfolios souring, while the Reserve Bank of Australia cited concern that euro-area turmoil is dimming prospects for the global economy as it lowered its benchmark rate a second month. The euro declined 0.4 percent to $1.3344. Growth in German factory orders slowed in October, while the euro region’s economy expanded in the third quarter at the same pace as the prior three months, according to economist estimates compiled by Bloomberg before the data is released today. French 10-year yields climbed six basis points to 3.20 percent. The 10-year German bund yield rose two basis points to 2.22 percent. Australian stocks extended declines and the so-called Aussie weakened against the dollar after the central bank cut interest rates. Australia’s S&P/ASX 200 Index sank 1.4 percent and the currency retreated 1 percent to $1.0169. The Reserve Bank of Australia reduced the overnight cash-rate target by a quarter percentage point to 4.25 percent. ‘Downside Risk’ Asian economies are facing “much greater downside risks� now because of the possibility of a recession in the U.S. and Europe and the threat of destabilizing capital flows, the Asian Development Bank said in a report today. Uncertainty over the world economy means officials in the region must have “sufficient flexibility� to adjust policies quickly, it said. About nine stocks fell for one that rose in the MSCI All Country World Index today. Declines in Japan’s Nikkei 225 Stock Average, Hong Kong’s Hang Seng Index and South Korea’s Kospi Index exceeded 1 percent. Industrial & Commercial Bank of China Ltd. (1398) slumped 1.2 percent in Hong Kong. Chinese banks’ risk related to the property market is understated, Charlene Chu, head of China financial institutions at Fitch Ratings, told reporters on a teleconference yesterday. “People want to move away from risk assets,� said Naoteru Teraoka, general manager at Tokyo-based Chuo Mitsui Asset Management Co., which oversees about $20 billion. “The market is unstable and has been moving up and down like a see-saw.� Copper, Oil S&P 500 futures expiring in December fell to 1,249.30, signaling the U.S. equity benchmark may pare yesterday’s 1 percent gain. The Institute for Supply Management’s non- manufacturing index unexpectedly fell to 52 last month from 52.9 in October, according to a report yesterday. Fifty is the dividing line between expansion and contraction and the measure was projected to rise to 53.9, according to the median forecast in a Bloomberg News survey. Copper in London declined as much as 2.1 percent to $7,776 a ton. Gold for immediate delivery retreated 0.4 percent to $1,716.57 an ounce. January oil futures slid as much as 0.6 percent to $100.38 a barrel on the New York Mercantile Exchange. To contact the reporters on this story: Lynn Thomasson in Hong Kong at lthomasson@bloomberg.net; Norie Kuboyama in Tokyo at nkuboyama@bloomberg.net To contact the editor responsible for this story: Alexander Kwiatkowski at akwiatkowsk2@bloomberg.net

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