Investors in 10 markets from New York to Paris and Tokyo forecast that stocks will fall over the next six months, snuffing out a two-week rally, as policy makers grapple with the deepest global recession since World War II. More respondents in the Bloomberg Professional Global Confidence Survey are predicting declines for the Standard & Poor’s 500 Index, the U.K.’s FTSE 100, the CAC 40 in France, Germany’s DAX, Spain’s IBEX 35, the Swiss Market Index, Italy’s S&P/MIB, the Bovespa in Brazil and Mexico’s Bolsa, the poll of 2,486 users taken Feb. 2 to Feb. 6 showed. In Japan the level of pessimism stayed the same. It’s the first time users in all 10 countries have estimated drops since the survey began in 2007. Investors grew more pessimistic even as speculation that government efforts around the world would revive economic growth sparked a 5.5 percent advance in the MSCI World Index. President Barack Obama said this week that the U.S. faces a “full-blown crisis” as his administration pushed for an $800 billion stimulus package and separate measures to rescue banks. “The massive question is how sustained a rally can be,” said Lawrence Peterman, investment director at Eden Financial Ltd. in London, who participated in the survey. “A lot depends on the U.S. economy. Until we see some positive numbers out of the U.S., the market will carry on being quite choppy.” The MSCI World is still down 50 percent from its October 2007 record. The global gauge posted its worst start to a year in January as the U.S. economy contracted at the fastest pace in 26 years and companies from Redmond, Washington-based Microsoft Corp. to Frankfurt-based Deutsche Bank AG announced results that disappointed investors. Bank Rescue The benchmark index for 23 developed countries retreated 3.5 percent yesterday, snapping a five-day rally, on growing skepticism the U.S. government’s bank rescue will work. Treasury Secretary Timothy Geithner said he’s still “exploring a range of different structures” to bail out lenders and pledged up to $2 trillion for programs aimed at spurring new lending and addressing banks’ toxic assets. Indexes in all of the 10 nations tracked in the Bloomberg survey plunged more than 26 percent in the past year as credit market losses and writedowns at financial firms that topped $1 trillion sent the U.S., Europe and Japan into the first simultaneous recessions since World War II. Corporate profits in America also slumped the most since at least 1998 last quarter. The Bloomberg confidence index in the U.S. decreased 11 percent to 34.5 this month. A reading below 50 indicates investors expect stocks to retreat in the next six months while a reading above 50 signifies expectations of a rally. ‘Global Problem’ Earnings fell 37 percent for the 336 companies in the Standard & Poor’s 500 Index that released fourth-quarter results from Jan. 12 through yesterday, data compiled by Bloomberg show. The period is projected to be the sixth straight quarter of decreasing profits, the longest streak on record. “The question on everyone’s mind is, ‘how long is this going to last and how deep will the recession get before we see some improvement?’” said John Carey, a Boston-based money manager at Pioneer Investment Management, which oversees about $200 billion. “It seems to be a global problem.” Pessimism increased across Europe as the Washington-based International Monetary Fund forecast that the U.K. economy will shrink the most since 1946. The reading for British investors dropped 2 percent to 32.8. The Bank of England last week was forced to cut its benchmark interest rate to 1 percent, the lowest since the bank was founded in 1694, to drag the economy out of its recession. AAA Ratings Pessimism surged in Germany, Europe’s largest economy, with the Bloomberg gauge dropping 20 percent to 34. Sentiment in Spain, which lost its AAA rating from S&P in January, sank 21 percent to 29.6. S&P also cut its classifications on Portugal and Greece last month. The measure for Switzerland fell 5.9 percent to 37.6, while France’s slipped 24 percent to 35.5 and Italy’s slid 14 percent to 42.7. Profits have fallen 72 percent for 399 western European companies that have reported earnings this year, according to data compiled by Bloomberg. Investors in Japan maintained their prediction for more losses, with the country’s reading unchanged at 36.5. The Bank of Japan said this month that the world’s second-largest economy is deteriorating at a pace unseen in the past half century. Sentiment dropped the most in Mexico, falling 34 percent to 34. Consumer confidence in the U.S., the biggest buyer of Mexican exports, sank to the lowest level on record in January as jobs evaporated and home values sank, signaling a further slide in spending. Investors were the least pessimistic in Brazil, with the country’s reading slipping 2.5 percent to 46.7. The Bovespa has climbed 9.7 percent this year on speculation government efforts to support growth and falling interest rates will help the economy expand.

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