European stocks fell from a four- month high and the euro weakened after earnings from ING Groep NV and Securitas AB trailed estimates and German exports and industrial output dropped more than forecast. Commodities retreated, while German bunds rose and the yen strengthened. The Stoxx Europe 600 Index dropped 0.3 percent at 6:42 a.m. in New York, after losing as much as 0.7 percent. Standard & Poor’s 500 Index futures slid 0.2 percent. The euro depreciated 0.3 percent to $1.2364, while the yen appreciated against all 16 major peers. The German 10-year bund yield slipped five basis points, with the similar-maturity Treasury note rate dropping on basis point, snapping a three-day increase. Oil lost 0.5 percent to $93.18 a barrel, and aluminum, zinc and copper fell at least 0.5 percent. ING, the biggest Dutch financial-services company, reported a 22 percent decline in profit and Securitas, the world’s second-largest guarding services company, said sales growth was weak. German exports fell 1.5 percent in June from the previous month and industrial production dropped 0.9 percent, reports showed today. “There are many challenges that lie ahead before the European debt crisis is resolved,� said Sumino Kamei, a senior analyst in Tokyo at the Bank of Tokyo-Mitsubishi UFJ Ltd., a unit of Japan’s biggest financial group by market value. “It’s hard to have a positive view on the euro in the mid to longer term as we continue to see downward pressure on the region’s economies.� Missing Estimates More than three stocks dropped for every one that climbed on the Stoxx 600. Of the 228 companies in the equity benchmark that have reported second-quarter earnings, half have fallen short of the average analyst estimate for net income. ING slid 1.4 percent. Securitas tumbled 8.6 percent, the most in six months. Rio Tinto Group advanced 2 percent as the world’s third-biggest mining company reported first-half profit of $5.9 billion, more than the average estimate of $5.04 billion. The decline in U.S. futures indicated the S&P 500 will retreat from a three-month high. The yield on the 10-year U.S. Treasury note fell to 1.62 percent before the government sells $24 billion of similarly-dated securities and $16 billion of 30- year bonds tomorrow. The euro depreciated 0.6 percent against the yen, while Japan’s currency strengthened 0.3 percent versus the dollar. The pound rebounded, gaining 0.2 percent against the dollar, after Bank of England Governor Mervyn King said a rate cut might be counterproductive. German Auction The yield on the two-year German note declined two basis points to minus 0.049 percent, below zero for the 24th consecutive day. The government sold 3.4 billion euros ($4.2 billion) of 10-year bunds today at an average yield of 1.42 percent, up from 1.31 percent at the previous auction. Spain’s two-year note yield increased 26 basis points, climbing for the second day, with Italy’s rate jumping 18 basis points. The yield on the Greek bond due February 2023 jumped eight basis points to 24.68 percent, with the price sliding to 19.36 percent of face value. Standard & Poor’s cut the outlook on Greece’s CCC rating, eight levels below investment grade, reflecting the risk of a downgrade if the nation is unable to obtain its next disbursement of bailout loans from the European Union and International Monetary Fund rescue package, according to a statement yesterday. The Markit iTraxx SovX Western Europe Index of credit- default swaps on 15 governments climbed two basis points to 246.5, with contracts on Spain rising 14.5 basis points, the first increase in four days. The S&P GSCI gauge of 24 commodities declined 0.5 percent, with copper down 0.6 percent. Germany is the third-largest copper consumer after China and the U.S. Crude in New York fell after jumping 7.5 percent the previous three days. To contact the reporters on this story: Stephen Kirkland in London at skirkland@bloomberg.net; To contact the editor responsible for this story: Mark Gilbert at magilbert@bloomberg.net

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