Stocks Decline

Stocks in Europe and Asia dropped on concern banks may face rating downgrades and further losses as the recession deepens., Bloomberg 2/17/2009 5:34:35 AM

Swedbank AB and UniCredit SpA declined more than 4 percent and the euro fell to a 10-week low after Moody’s Investors Service said it may downgrade banks with units in eastern Europe. Woori Finance Holdings Co., which yesterday applied for state funding, sank 6.8 percent as the cost for South Korean banks to borrow dollars rose to a record. Daimler AG slid 4.1 percent after the maker of Mercedes-Benz trucks and cars posted earnings that missed analysts’ estimates.

The MSCI World Index decreased 1.2 percent to 820.96 at 1:09 p.m. in London, extending its 2009 retreat to 11 percent. The gauge of 23 developed markets has dropped for six straight days as companies from Electricite de France SA to Diageo Plc posted disappointing results and U.S. Treasury Secretary Timothy Geithner failed to convince investors his bank rescue will work.

The MSCI Emerging Markets Index declined 3.5 percent, the biggest slide since November. Poland’s WIG20 Index slipped for a fifth day, losing 3.7 percent, while the Czech Republic’s PX Index tumbled 7 percent, the steepest drop since October.

Europe’s Dow Jones Stoxx 600 Index declined 1.9 percent as Givaudan SA and Yara International ASA fell. Austria’s ATX Index slid 5 percent after Moody’s said the country’s banking system is the most exposed” to the deteriorating economies in east and central Europe.

The MSCI Asia Pacific Index dropped 2.7 percent. In Japan, where Finance Minister Shoichi Nakagawa said he will resign amid accusations he was drunk at a Group of Seven press conference, the Nikkei 225 Stock Average lost 1.4 percent.