By Michael Patterson May 21 (Bloomberg) -- Stocks fell for a seventh day, with Standard & Poor’s 500 Index futures falling beneath their low during the May 6 rout, and 30-year Treasury yields dropped to their lowest of the year on concern that Europe’s debt crisis will slow global economic expansion. The euro pared gains. The MSCI World Index of developed-nation shares retreated 0.4 percent at 7:59 a.m. in New York, heading for an almost eight-month low. Futures on the S&P 500 expiring in June slid as much as 1.2 percent to 1,057.6, following a 3.9 percent plunge in the U.S. benchmark index yesterday, and Dow Jones Industrial Average futures retreated below 10,000. The euro rose 0.4 percent to $1.2540, after climbing to $1.2672. The 30-year Treasury yield dropped to as low as 4.05 percent. The plunge in global equities this month wiped out $5.3 trillion of market value as Germany’s crackdown on speculation, plans for spending cuts by Europe’s most indebted nations and proposals to tighten U.S. finance industry regulation shook investor confidence. The German lower house of parliament approved the country’s share of a $1 trillion lending package to ease Europe’s debt woes, which Federal Reserve Governor Daniel Tarullo said yesterday may pose a threat to the global economy. “It’s a material risk that the problem is continuing to get bigger and to get worse,” Arnab Das, the head of global market research and strategy at Roubini Global Economics in London, said in an interview with Bloomberg Television. “As these budget cuts come through, the economies are potentially going to go sharply downward. The general tendency is going to be downward” for the euro, he said. Casualty Insurer The Stoxx 600 extended its slide this week to 6.2 percent. TrygVesta A/S, the Nordic region’s second-largest property and casualty insurer, tumbled 8.4 percent today in Copenhagen after reporting an unexpected first-quarter loss. Lanxess AG slipped 3 percent in Frankfurt after BofA Merrill Lynch Global Research downgraded the shares. The MSCI Asia Pacific Index slumped 1.2 percent. Honda Motor Co., which gets about 81 percent of its sales from overseas, declined 2.5 percent in Tokyo. Sonic Healthcare Ltd., which provides medical tests, tumbled 20 percent in Sydney after saying earnings will be less than forecast. The retreat in U.S. futures indicated the S&P 500 may extend yesterday’s plunge, the worst since April 2009. The gauge fell to within 6 points of its low on May, when panic selling prompted calls for reform. The S&P 500 is now trading at about 15.5 times the reported earnings of its companies, the lowest level since July, according to Bloomberg data. Investors withdrew some $12 billion from U.S. and European equity funds in the week to May 19, according to research firm EPFR Global. Emerging Markets Fall The euro gained as much as 1.5 percent earlier today amid speculation investors betting on a decline were forced to buy the currency to cover their short positions. European Union President Herman Van Rompuy hosts a meeting of finance ministers in Brussels today to discuss reforms to economic governance. The yen declined 0.4 percent against the dollar after Japanese Finance Minister Naoto Kan said it’s undesirable for currencies to stray from “stable” levels. South Korea’s won forwards weakened for a third day, with three-month contracts falling 0.9 percent. President Lee Myung Bak convened a National Security Council meeting as North Korea threatened to sever all ties and reiterated its war threat after being accused of sinking one of the South’s warships. South Korea’s financial markets were closed today for a holiday. The MSCI Emerging Markets declined 0.5 percent. Benchmark indexes in Taiwan, Indonesia and Vietnam extended declines to more than 10 percent below recent highs after U.S. reports yesterday showed jobless claims unexpectedly rose and a gauge of leading economic indicators posted a surprise drop. Corporate Bonds The German 10-year bund yield slipped three basis points to 2.65 percent after business confidence in the nation unexpectedly fell this month. The extra yield investors demand to hold global corporate bonds rather than benchmark government debt widened 7 basis points to 184, the biggest difference since Dec. 14, according to Bank of America Merrill Lynch index data. Yields on 30-year Treasury bonds decline to the lowest level this year, dropped to 4.05 percent in New York. Crude oil for July delivery fell to $69.49 a barrel on the New York Mercantile Exchange. Nickel dropped 0.8 percent to $21,039 a metric ton on the London Metal Exchange. To contact the reporter on this story: Michael Patterson in London at mpatterson10@bloomberg.net.

Source