Europe Stocks, U.S. Futures Drop


European stocks and U.S. index futures fell after disappointing forecasts from Royal Philips Electronics NV, DuPont Co. and Merck & Co. overshadowed interest-rate cuts by the European Central Bank and the Bank of England.

Philips, Europe’s largest maker of consumer electronics, dropped 4.4 percent after saying it won’t meet its target of doubling earnings by 2010. DuPont, the third-biggest U.S. chemical maker, lost 7.5 percent on a 2009 profit forecast that trailed analysts’ estimates. Merck sank 3.4 percent after the drugmaker predicted 2009 earnings may decline.

Europe’s Dow Jones Stoxx 600 Index dropped 1.1 percent to 196.08 at 1:15 p.m. in London, after climbing as much as 2 percent. Futures on the Standard & Poor’s 500 Index sank 1.7 percent.

The Bank of England cut its key rate by 1 percentage point to 2 percent, the lowest level since 1951. ECB policy makers lowered the benchmark lending rate by 75 basis points to 2.5 percent. Sweden’s central bank cut its benchmark rate by the most since 1992, a bigger reduction than economists had forecast. Indonesia unexpectedly lowered rates and New Zealand reduced borrowing costs by a record as policy makers combat recessions in the world’s biggest economies.

The MSCI World Index of equities in 23 developed countries has tumbled 46 percent in 2008 as the collapse of the U.S. mortgage market froze credit and pushed the U.S., Japan, the U.K. and Germany into recessions. More than $30 trillion has been erased from the value of global equities in 2008.

Japan stocks fell on speculation U.S. carmakers will enter bankruptcy, reducing demand in the world’s biggest economy, and as companies cut investment at the fastest pace in six years to cope with the global recession. he Nikkei 225 Stock Average declined 79.86, or 1 percent, to close at 7,924.24 in Tokyo, after rising as much as 1.3 percent.

Australian S&P/ASX 200 Index rose 5.60 points, or 0.2 percent, to 3,533.80 at the close in Sydney, the most since Nov. 28.


TradingEconomics.com, Bloomberg.com
12/4/2008 5:41:34 AM