Stocks in Europe and Asia Drop

Stocks fell in Europe and Asia, extending the MSCI World Index’s worst start to a year, as the deepening global recession batters corporate earnings. U.S. index futures retreated., Bloomberg 2/2/2009 5:12:27 AM

Barclays Plc sank 11 percent as Moody’s Investors Service cut the U.K. lender’s debt rating on potential credit writedowns. Hitachi Ltd. plunged 17 percent after forecasting a record loss, while Mitsubishi Electric Corp. declined 9.1 percent on a lower profit forecast. Ford Motor Co. slid 3.7 percent in Germany before a report that may show U.S. manufacturing shrank at the fastest pace in 28 years.

The MSCI World Index slipped 1.1 percent to 829.81 at 11:59 a.m. in London. The benchmark index of 23 developed countries tumbled 8.9 percent last month, the biggest January decline since the gauge was developed in 1970.

Europe’s Dow Jones Stoxx 600 Index fell 2.5 percent, bringing its 2009 drop to 6 percent, as Delhaize Group and Royal Ahold NV declined. The MSCI Asia-Pacific Index lost 1.8 percent.

Financial shares led today’s retreat in Europe, with an index of banks in the Stoxx 600 tumbling 5.6 percent. Earnings at financial companies in the regional index slid 65 percent last year, the biggest drop among 10 industry groups, according to analyst estimates compiled by Bloomberg.

Japanese stocks dropped for a second day after companies from Hitachi Ltd. to Nippon Paper Group Inc. cut earnings targets, signaling a deepening of the nation’s economic slump. The Nikkei 225 Stock Average lost 120.07, or 1.5 percent, to close at 7,873.98 in Tokyo, sinking 4.6 percent in the past two sessions.