European Stocks, U.S. Futures Fall; Daimler, JPMorgan, UPS Drop
By Adria Cimino
June 24 (Bloomberg) -- European stocks fell for a fifth day as higher oil prices and weakening consumer confidence in Germany weighed on carmakers, airlines and retailers, while a drop in mortgage approvals pushed U.K. homebuilders lower. U.S. index futures and Asian financial shares dropped.
Daimler AG, the world's second-largest maker of luxury cars, and Ryanair Holdings Plc declined after oil rose for a third day. Kesa Electricals Plc dropped as the electronics retailer refrained from announcing a stock buyback after profit growth weakened. Taylor Wimpey Plc slumped as mortgage approvals in the U.K. declined in May to the lowest since at least 1997. JPMorgan Chase & Co. and United Parcel Service Inc. retreated in German trading.
``The global economic environment is strongly deteriorating with rising raw-material costs and inflation,'' said Matthieu Giuliani, a fund manager at Palatine Asset Management in Paris, which oversees $9.5 billion. ``It's a snowball effect. The outlook for earnings will be revised lower.''
The Dow Jones Stoxx 600 Index lost 1.3 percent to 290.87 at 11:10 a.m. in London. The index earlier fell to 290.14, the lowest since October 2005. Futures on the Standard & Poor's 500 Index slipped 0.3 percent, while the MSCI Asia Pacific Index decreased less than 0.1 percent.
The Stoxx 600 has tumbled 20 percent this year on speculation higher inflation will keep policy makers from cutting borrowing costs, while credit-related losses approaching $400 billion erode economic and profit growth.
Job Losses, Writedowns
The world's biggest financial firms may lose as many as 175,000 jobs by this time next year as banks shed workers amid slowing revenue and writedowns, executive recruiters say.
Financial companies have announced plans to trim more than 83,000 jobs since last July, according to figures compiled by Bloomberg. As more employees are fired, workforce reductions may exceed those from the market slump of 2000 to 2003 when technology-related shares collapsed, the recruiters said.
National benchmark indexes decreased in all 18 western European markets except for Norway. France's CAC 40 dropped 1.2 percent, and Germany's DAX fell 1.7 percent. The U.K.'s FTSE 100 slipped 0.8 percent.
A report today showed consumer confidence in Germany, Europe's largest economy, dropped to the lowest in more than two years as soaring energy prices sapped people's purchasing power.
Daimler slid 2.7 percent to 42.36 euros. Fiat SpA, Italy's biggest carmaker, retreated 2.2 percent to 11.33 euros.
Ryanair lost 1.9 percent to 2.91 euros.
Oil Climbs
Crude rose as the U.S. dollar dropped, enhancing the appeal of commodities as an inflation hedge, and OPEC's secretary- general said the group won't increase production.
Oil for August delivery increased as much as $1.16, or 0.9 percent, to $137.90 a barrel in electronic trading on the New York Mercantile Exchange.
Concern higher oil prices will curb earnings prompted Citigroup Inc. to recommend selling shares of Ciba Holding AG and Solvay SA.
Ciba, the world's largest maker of colors for plastics, fell 4 percent to 32.76 francs. Solvay, the biggest maker of soda ash, dropped 2.3 percent to 89.75 euros. Citigroup cut its recommendation on both stocks to ``sell'' from ``hold.''
``With soaring oil-derived raw-material costs, lackluster end-market demand, weak U.S. dollar and rising competition from emerging markets, the downward pressure on earnings is immense,'' the brokerage wrote.
Kesa, Taylor Wimpey
Kesa sank 5.3 percent to 165.25 pence. Chief Executive Officer Jean-Noel Labroue said profit and sales growth weakened over the second half and that a drop in consumer confidence is continuing. Kesa, which raised 550 million euros ($856 million) by selling its BUT unit, refrained from announcing the timing or amount of a share buyback.
Taylor Wimpey, the U.K.'s largest homebuilder, lost 7 percent to 60.25 pence. Bellway Plc, a U.K. homebuilder aimed at first-time buyers, slipped 4.3 percent to 471 pence.
U.K. mortgage approvals declined to the lowest since at least 1997 in May as the slumping property market discouraged buyers, a report by the British Bankers' Association showed.
JPMorgan declined 9 cents to $36.78. Merrill Lynch & Co. lowered its earnings-per-share estimate for the bank to $2.79 from $3.30 for 2008.
UPS, the world's largest package-delivery company, lowered its second-quarter profit forecast because of rising fuel costs and a slowing U.S. economy. UPS lost $1.67 to $64.59.
Drugmakers Rally
Drugmakers rallied, lifting the Europe Stoxx Health Care Index 1 percent to a three-week high, the best-performing group among the 18 industries in the Stoxx 600.
Novo Nordisk A/S added 3.5 percent to 314 kroner. The world's biggest insulin producer received U.S. regulatory approval to sell a new pill that combines its diabetes treatment Prandin with metformin.
Novartis AG, Switzerland's second-largest drugmaker, added 2.4 percent to 55.4 francs. Exane BNP Paribas raised its recommendation on the stock to ``neutral'' from ``underperform,'' citing recent ``strong data in breast cancer and promising results for renal cell cancer.''
To contact the reporter on this story: Adria Cimino in Paris at [email protected]. Last Updated: June 24, 2008 06:14 EDT
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