By Stephen Kirkland June 22 (Bloomberg) -- Stocks and U.S. futures fell, with the MSCI World Index snapping the longest rally in 11 months, as governments prepared to cut spending and tighten bank rules. The yuan weakened after yesterday’s surge on China’s plan to expand the currency’s trading range against the dollar. The MSCI World Index of stocks in 24 developed nations lost 0.7 percent at 12:20 p.m. in London. The MSIC gauge for emerging markets dropped 1.2 percent, ending the longest stretch of gains since 2005. Futures on the Standard & Poor’s 500 Index slipped 0.3 percent. The yuan depreciated 0.2 percent per dollar. Copper retreated for the fourth day in five sessions and crude oil declined for the first time in three days. Leaders of the Group of 20 industrialized nations meet June 26 to consider ways to reduce deficits and tackle unprecedented levels of government debt without harming the global economic recovery. In the U.K., Chancellor of the Exchequer George Osborne’s budget today is likely to cut spending by the most since the 1980s and increase many taxes. “Investors are worried developed nations won’t be able to support their economies,” said Hiroshi Morikawa, a strategist in Tokyo at MU Investments Co., which manages $14 billion. “People are in no mood to take on risk.” The Stoxx Europe 600 Index of equities in 18 western European countries fell 1.1 percent, snapping a nine-day rally, the longest winning streak in 11 months. Basic resources stocks led the retreat, with BHP Billiton Ltd., the world’s biggest mining company, falling 2.2 percent in London. BNP Paribas SA led declines by the region’s banks, falling 3.1 percent in Paris after Fitch Ratings cut its credit rating on France’s biggest lender. Canon, Mitsui The MSCI Asia Pacific Index slipped 0.9 percent, its first drop in nine days. Newcrest Mining Ltd., Australia’s biggest gold producer, declined 1.8 percent in Sydney. Canon Inc., a Japanese camera maker that counts Europe as its biggest market, dropped 2.7 percent in Tokyo. Mitsui O.S.K. Lines Ltd., the operator of the world’s largest merchant fleet, retreated 1.8 percent after freight rates slumped for a 17th consecutive day. “With the gains we had in markets in recent days, and given that the ongoing economic problems are still very much around us, there’s room for profit taking at these levels,” said Francisco Salvador, co-strategist at Iberian Equities in Madrid. “The yuan revaluation has not come with the strength that many expected, nor it will have the wide effect many hoped for.” U.S. Futures The decline U.S. index futures signaled the S&P 500 may extend yesterday’s 0.4 percent retreat. Sales of U.S. previously owned homes rose 6 percent to a 6.12 million annual rate in May, to the highest level in six months, as buyers rushed to beat a June tax-credit deadline, economists said before a data from the National Association of Realtors due at 10 a.m. in Washington. The MSCI Emerging Markets Index ended its longest stretch of gains since September 2005. The Dubai Financial Market General Index lost 1.4 percent after index provider MSCI Inc. kept the United Arab Emirates as a frontier market, disappointing some investors who anticipated an upgrade to emerging market status. South Korea’s won declined 0.9 percent against the dollar to lead declines in major currencies. China’s yuan weakened the most since 2008 on speculation the central bank will intervene to limit gains after dropping a two- year peg to the dollar over the weekend, a move that sent the Chinese currency surging 0.4 percent yesterday. The yen strengthened, approaching a one-week high against the euro and climbing against all 16 of its major counterparts, while the Swiss franc rose to a record against the euro. U.K. Protecting Rating The pound weakened 0.3 percent to $1.4715 before the U.K.’s emergency budget, which some investors said may hamper the country’s economic recovery. Osborne is seeking to prevent the loss of Britain’s top grade investment rating through austerity in public spending. Copper for delivery in three months fell 1.3 percent to $6,517 a metric ton on the London Metal Exchange, after rising 2.6 percent yesterday, the most in a week. Oil futures for July delivery dropped 1.5 percent to $76.65 a barrel on the New York Mercantile Exchange. Sales of corporate bonds are increasing, with companies around the world issuing $17 billion of notes yesterday, more than three times the daily average of the past two months, according to data compiled by Bloomberg. HeidelbergCement AG, the world’s third-largest cement maker, and ENI SpA, Italy’s biggest energy company, are leading sales in Europe today. The Heidelberg, Germany-based cement company is offering 500 million euros of bonds due December 2015, while Rome-based ENI is selling 10-year securities in its first bond deal in almost a year, bankers familiar with the transactions said. ----With assistance from Keith Campbell, Claudia Carpenter, David Merritt, Michael Patterson and Alexis Xydias in London. Editors: Stephen Kirkland, Paul Armstrong To contact the reporters on this story: Stephen Kirkland in London at skirkland@bloomberg.net;

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