European, Asian Stocks Decline

Stocks in Europe and Asia declined, extending the MSCI World Index’s worst year on record, as concern mounted the deteriorating global economy will curb earnings. U.S. index futures advanced.

Daimler AG and Bayerische Motoren Werke AG sank more than 2 percent after Japan’s Toyota Motor Corp. forecast its first operating loss in 71 years on plunging North American and European car sales and a surging yen. In Asia, DBS Group Holdings Ltd. slumped 4.9 percent after the bank sought capital in a rights offering.

Europe’s Dow Jones Stoxx 600 Index dropped for a fourth day, retreating 0.8 percent to 194.87 at 12:11 p.m. in London. The MSCI Asia Pacific Index decreased 0.5 percent. Standard & Poor’s 500 Index futures expiring in March added 0.5 percent.

The MSCI World Index has slumped 43 percent this year as credit-related losses and writedowns at financial firms topped $1 trillion and the U.S., Europe and Japan entered the first simultaneous recessions since World War II. The drop has left the gauge of 23 developed markets valued at 11.6 times the reported earnings of its 1,694 companies. That compares with an average ratio of 26.5 this decade, data compiled by Bloomberg show.

Stocks pared losses after China lowered interest rates for the fifth time in three months to support the world’s fourth- biggest economy.,
12/22/2008 5:23:46 AM