Stocks Drop

Stocks slumped, while Treasuries and the dollar gained, as the Obama administration warned that some banks will need more government aid and bankruptcy may be the best option for General Motors Corp. and Chrysler LLC., Bloomberg 3/30/2009 5:24:09 AM

Citigroup Inc. and Deutsche Bank AG fell more than 7 percent as U.S. Treasury Secretary Timothy Geithner said some banks will need large amounts” of assistance. Daimler AG dropped 7.4 percent after an Obama administration official said GM and Chrysler must overhaul recovery plans to justify more aid. GM sank 21 percent in Germany. Aluminum Corp. of China Ltd. tumbled 12 percent as profit plunged and commodities retreated.

The MSCI World Index lost 1.5 percent to 812.69 at 12:23 p.m. in London, trimming its biggest monthly gain since 2003. The gauge of 23 developed countries has rebounded from its worst annual start on record as banks from Citigroup to JPMorgan Chase & Co. said they made money in the first two months of 2009 and Geithner unveiled plans to rid financial firms of toxic assets.

Europe’s Dow Jones Stoxx 600 Index slipped 2.1 percent, erasing most of its March rise and leaving it with a quarterly slump of 13 percent. Goldman Sachs Group Inc. said the 9.8 percent gain in European stocks since March 9 will lose steam as gains were fueled by low share prices and government stimulus packages rather than an improvement in the economy.

The MSCI Asia Pacific Index lost 3.8 percent to 82.25 as of 7:19 p.m. in Tokyo, following a five-day, 7.5 percent jump that took valuations to the highest since December 2007. Japan’s Nikkei 225 Stock Average slumped 4.5 percent to 8,236.08, while Hong Kong’s Hang Seng Index declined 4.7 percent. Benchmark indexes throughout the region dropped.