By Daniel Hauck Aug. 4 (Bloomberg) -- Global stocks dropped for the first time in four days after the MSCI World Index traded at its most expensive level relative to earnings since 2003. Metals slid and oil fell from a seven-week high. The MSCI World Index declined 0.2 percent at 11:33 a.m. in London after the gauge of 23 developed nations traded at 24.1 times the earnings of its 1,656 companies. Futures on the Standard & Poor’s 500 Index slipped 0.7 percent. Copper retreated from its highest level since October, while crude dropped 1.3 percent in New York. The yen advanced against all 16 most-traded currencies tracked by Bloomberg. Stocks fell after the global index climbed 14 times in 16 days. While second-quarter earnings reports helped drive the five-month, 55 percent rally, UBS AG posted today its third consecutive quarterly loss and Bayerische Motoren Werke AG reported a 76 percent drop in profit. HSBC Holdings Plc Chairman Stephen Green said in a Bloomberg Television interview that the economic recovery may be “anemic.” “Markets are fair value at best,” said Sergi Martin Amoros, who oversees the equivalent of $5.76 billion as chief executive officer at Credit Andorra’s Credi Invest asset management unit in Andorra. “Macroeconomic data are improving only relative to the end-of-the-world scenario we had some months ago. We are quite skeptical.” Europe’s Dow Jones Stoxx 600 Index declined 0.8 percent after the regional gauge traded at 35.6 times earnings, the most expensive level since 2003, according to data compiled by Bloomberg. UBS, BMW Fall UBS fell 5.5 percent in Zurich after Switzerland’s largest bank by assets said its net loss widened to 1.4 billion francs ($1.32 billion) from 395 million francs a year earlier. BMW dropped 3.8 percent in Frankfurt. The world’s largest maker of luxury cars said second-quarter profit fell to 119 million euros ($171 million.) The MSCI Asia Pacific Index added 0.2 percent, trimming a gain of as much as 1.1 percent, as Suzuki Motor Corp. said profit was almost wiped out. U.S. futures retreated after the Standard & Poor’s 500 Index climbed above 1,000 for the first time since November yesterday. Suzuki fell 5 percent after Japan’s second-biggest minicar maker said first-quarter net income dropped 92 percent. Yamaha Motor Co. the world’s second-largest motorcycle maker, slumped 9.9 percent after quadrupling its forecast to a full-year loss of 182 billion yen ($1.9 billion). Emerging Markets The MSCI Emerging Markets Index dropped 0.5 percent as commodities slid and concern deepened the Chinese government will tighten banks’ capital requirements. The 22-country benchmark closed at an 11-month high yesterday, recouping its losses since the collapse of Lehman Brothers Holdings Inc. triggered a freeze in global credit markets. The index is valued at 17.8 times reported earnings, the most expensive level since Oct. 29, 2007, when it traded at 18 times, according to Bloomberg data. Copper for delivery in three months dropped 1.2 percent to $5,928 a metric ton on the London Metal Exchange and aluminum declined 2 percent to $1,930 a ton. Gold fell 0.6 percent to $951.55 an ounce. Crude oil for September delivery retreated 1.3 percent to $70.67 a barrel on the New York Mercantile Exchange. The yen advanced against all 16 most-traded currencies tracked by Bloomberg as investors scaled back purchases of higher-yielding assets. The Japanese currency rose most versus the Swedish krona, strengthening 1.2 percent. It advanced 1.1 percent compared with the South African rand. $1.5 Trillion U.S. Treasuries advanced, with the yield on the 30-year bond falling 2 basis points to 4.38 percent. The MSCI World Index had tumbled as much as 59 percent from an October 2007 record through March 9, 2009, as the U.S., Europe and Japan fell into their first simultaneous recessions since World War II after the collapse of subprime mortgages froze credit markets and spurred $1.5 trillion in losses and writedowns at financial firms. The global stocks gauge is still down 37 percent from its all-time high. A gauge of financial-market stress dropped to the lowest level in more than two years today amid evidence that financial institutions are emerging from the worst of the global credit seizure. The TED spread, the difference between what banks and the U.S. Treasury pay to borrow for three months, narrowed to 29.4 basis points yesterday, the first time it has dropped below 30 basis points since March 26, 2007, when it was at 29.2 basis points. The measure has declined 434 basis points since peaking in October last year after the September collapse of Lehman. Corporate bond sales in Europe already are within 100 million euros of breaking the full-year record of 792 billion euros set last year, according to data compiled by Bloomberg. Borrowers have issued bonds as other sources of funding dried up, while investors were attracted by returns on investment- grade debt of 10.1 percent so far this year, according to Merrill Lynch & Co. data, the highest since 1998. To contact the reporters on this story: Daniel Hauck in London at dhauck1@bloomberg.net.

Source