European Stocks Decline

Stocks in Europe fell as investors speculated government efforts to shore up the financial system won’t be enough to prevent the global economy from weakening., Bloomberg 1/19/2009 6:19:40 AM

Royal Bank of Scotland Group Plc led declines among banks, slumping 48 percent, after saying it expects to report a loss for 2008. BASF SE dropped 4.4 percent as the world’s largest chemical producer reduced production and said it may cut additional jobs after demand deteriorated significantly.” Stock markets in the U.S. are closed today for the Martin Luther King Jr. holiday.

The Dow Jones Stoxx 600 Index slid 1.3 percent to 190.47 at 1:18 p.m. in London. The measure has tumbled 11 percent over the past nine days as companies from Deutsche Bank AG to Alcoa Inc. fueled concern earnings will deteriorate further as the global economic slump deepens.

Asian stocks advanced, led by commodity companies and automakers, amid optimism government efforts to end the credit crisis will bolster corporate earnings.

Rio Tinto Group, the world’s No. 3 mining company, surged 5.7 percent in Sydney, and Honda Motor Co., which gets 51 percent of its profit from North America, rose 4 percent as Barack Obama’s top economic adviser said the U.S. will support consumers and the U.K. announced the second British bank rescue in three months. HSBC Holdings Plc fell 3 percent in Hong Kong after a shareholder said the company may need to sell shares.

The MSCI Asia Pacific Index added 0.5 percent to 85.06 as of 7:31 p.m. in Tokyo, with seven of its 10 industry groups advancing. Japan’s Nikkei 225 Stock Average added 0.3 percent, while South Korea’s Kospi Index rose 1.4 percent. Benchmark indexes in most of the region’s stock markets gained.

MSCI’s Asian gauge slumped 43 percent in 2008, its worst year on record, as the deepening financial crisis fueled a global recession that curbed demand for the region’s raw materials, automobiles and computers. The average valuation of the measure’s constituents has fallen about a fifth in the past year to 14 times estimated profit.

U.S. markets are closed today for a holiday. In New York, the Standard & Poor’s 500 Index rose for a second day on Jan. 16, adding 0.8 percent.