Stocks in Europe fell as investors speculated government efforts to shore up the financial industry won’t be enough to prevent the global economy from weakening. Royal Bank of Scotland Group Plc led declines among banks, slumping a record 67 percent, after saying it expects to post a loss of as much as 28 billion pounds ($41 billion) for 2008. BASF SE dropped 4.7 percent as the world’s largest chemical producer reduced production and said it may cut additional jobs after demand deteriorated “significantly.” Futures on the Standard & Poor’s 500 Index decreased 1.1 percent. Stock markets in the U.S. are closed today for the Martin Luther King Jr. holiday. Europe’s Dow Jones Stoxx 600 Index slid 2 percent to 189.13 at 3:00 p.m. in London, extending the measure’s 11 percent tumble during the past nine days as companies from Deutsche Bank AG to Alcoa Inc. fueled concern the global recession will wipe out profit growth. The U.K. government today said it will guarantee toxic bank assets and gave the Bank of England unprecedented power to buy securities. “I don’t agree it is addressing the problem,” said Roger Nightingale, who helps oversee about $1.1 billion as London-based strategist at Pointon York Ltd. “I have grave doubts that the policies pursued by this government are going to help in the medium to longer term,” he told Bloomberg Television. The euro-area economy will shrink 1.9 percent this year, the first time since the currency was introduced a decade ago, the European Commission said today. The European Central Bank, last month predicted a 0.5 percent contraction for 2009. European Markets National benchmark indexes fell in all 18 western European markets except Iceland. Germany’s DAX dropped 0.7 percent, while the U.K.’s FTSE 100 slipped 0.7 percent. Spain’s IBEX 35 lost 1.1 percent, led by Banco Santander SA. Spain had its AAA sovereign credit rating removed by Standard & Poor’s in the second downgrade of a euro-region government in five days, as the country’s first recession in 15 years swelled the budget deficit. Greece’s rating was cut one step to A- on Jan. 14. Dow Jones Industrial Average futures slid 1.1 percent, while Nasdaq-100 futures fell 0.4 percent today. Billionaire Warren Buffett, chairman of Berkshire Hathaway Inc. and one of the world’s most successful investors, said the U.S. has been struck by an “economic Pearl Harbor,” according to remarks aired on Dateline NBC yesterday. President-elect Barack Obama’s advisers signaled they will emphasize getting credit to consumers and businesses rather than helping banks as the new administration deploys the second half of the $700 billion rescue fund. Brazil, Canada Brazil’s Bovespa Index dropped 1.1 percent, led by Lojas Renner SA and Metalurgica Gerdau SA. Canada’s Standard & Poor’s/TSX Composite Index lost 0.4 percent as Royal Bank of Canada declined. Asia’s MSCI Asia Pacific Index rose 0.4 percent. RBS sank 67 percent to 11.6 pence after saying it expects to post a full-year loss of as much as 28 billion pounds, which would be the biggest ever reported by a U.K. company. Analysts forecast earnings at financial companies in the Stoxx 600 will rise 42 percent in 2009 following a 59 percent slide last year, according to Bloomberg data. The benchmark index posted its worst annual slump on record in 2008 as more than $1 trillion in credit losses and writedowns eroded profits. Plans by the U.K. Prime Minister Gordon Brown’s government will increase the cost of bailing out the nation’s banks by at least 100 billion pounds, the Treasury said today. This sent the pound lower against the euro and the dollar. ‘Disappointed’ “Many initiatives have been announced for U.K. banks this morning, but we are disappointed not to see the full removal of ‘bad assets’ from balance sheets,” JPMorgan Chase & Co. banking analyst Carla Antunes Da Silva wrote in a note to clients. Barclays Plc, the U.K. bank that turned down government funding last year, retreated 9.1 percent to 89.1 pence even after saying 2008 earnings will exceed estimates and calling its 25 percent share-price slump on Jan. 16 unjustified. Santander, Spain’s biggest bank, retreated 6.7 percent to 5.70 euros. Germany’s Deutsche Bank AG tumbled 11 percent to 17.835 euros. BASF declined 4.7 percent to 22.64 euros after the company said demand for all chemical products has failed to pick up in the first half of January. Syngenta AG, the world’s largest maker of agricultural chemicals, lost 2.5 percent to 211.4 francs. Cie. Financiere Richemont SA slid 4.2 percent to 16.83 francs. The biggest jewelry maker said third-quarter sales declined 7 percent as customers in Europe and North America reduced spending on Cartier necklaces and Chloe fashions. Brazil, Canada Pearson Plc led gains among media companies. The publisher of the Financial Times newspaper added 4.7 percent to 626 pence after saying earnings excluding some items rose about 20 percent in 2008, exceeding analysts’ estimates. In Brazil, Lojas Renner, the country’s biggest clothing retailer, declined 3.7 percent to 17.18 reais. Metalurgica Gerdau, parent of Latin America’s largest steelmaker, dropped 2.3 percent to 22.33 reais. Royal Bank of Canada, the nation’s biggest lender by assets, lost 2.1 percent to C$32.95.

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