Stocks in Europe, Asia Drop

Stocks in Europe and Asia declined after billionaire investor Warren Buffett said the economy has “fallen off a cliff” and the U.K. government took control of Lloyds Banking Group Plc., Bloomberg 3/9/2009 5:29:36 AM

Lloyds, Britain’s biggest mortgage lender, sank 9.3 percent, while the yield on the 10-year gilt fell to the lowest level since at least 1989. HSBC Holdings Plc plunged the most in at least 23 years in Hong Kong on concern that deepening loan losses at its U.S. unit will curb profits. Shinsei Bank Ltd., the Japanese lender partly owned by Christopher Flowers, slid 8.8 percent on plans to raise capital.

The MSCI World Index slipped 1.2 percent to 689.12 at 11:16 a.m. in London. A third government rescue for Citigroup Inc. and dividend cuts at companies from General Electric Co. to JPMorgan Chase & Co. have sent the gauge of 23 developed countries to a 25 percent drop this year, the worst start since the measure was created in 1970.

Futures on the Standard & Poor’s 500 Index fell 1.6 percent as Buffett said on CNBC that efforts to stimulate economic recovery may lead to inflation higher than the 1970s.

The global economy may shrink for the first time since World War II and trade will likely decline the most in 80 years, the World Bank said in a report yesterday. The assessment was more pessimistic than an International Monetary Fund report in January predicting 0.5 percent global growth this year.

Europe’s Dow Jones Stoxx 600 Index slumped 2.1 percent to 156.11, extending a 12-year low as Lonmin Plc dropped. The regional gauge has declined 21 percent in 2009 as companies from Danisco A/S to Bayer AG gave disappointing forecasts and credit market related losses at financial firms worldwide climbed to almost $1.2 trillion.

The MSCI Asia Pacific Index slid 1.7 percent. Japan’s Nikkei 225 Stock Average fell to the lowest level since October 1982 as the first current account deficit in 13 years fanned concern the economic slump is deepening.