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    Global Stocks, U.S. Index Futures Fall; L'Oreal, BT, BHP Drop

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    Global Stocks, U.S. Index Futures Fall; L'Oreal, BT, BHP Drop

    Post by sang_garuda on Fri Oct 31, 2008 5:55 pm

    Stocks fell in Europe and Asia, extending the MSCI World Index's worst monthly slump on record, as concern deepened the economic slowdown will stifle profit growth. U.S. index futures retreated before a report that will probably show consumer spending dropped.

    L'Oreal SA lost 9.1 percent after the world's biggest cosmetics company reduced its profit forecast as consumers cut purchases. BT Group Plc, the U.K.'s largest phone company, tumbled 21 percent after saying second-quarter earnings missed its targets. BHP Billiton Ltd., the biggest mining company, dropped 2.5 percent as copper retreated.

    ``Some of the corporate news is showing you that the real world is deteriorating rapidly,'' said Neil Dwane, chief investment officer for Europe at Allianz Global Investors' RCM unit who oversees $65 billion. ``The situation is still far too uncertain.'' Dwane spoke in a Bloomberg Television interview.

    The MSCI World Index lost 1 percent to 942.22 at 10:25 a.m. in London as all 10 industry groups decreased. Europe's Dow Jones Stoxx 600 Index declined 0.8 percent, while the MSCI Asia Pacific Index retreated 2 percent.

    Standard & Poor's 500 Index futures expiring in December slipped 2 percent. Spending by U.S. consumers probably fell in September, capping its weakest quarter in three decades, economists said before today's Commerce Department report.

    Asian stocks fell, adding to the regional benchmark index's worst month ever, as a record three-day rally fizzled after companies slashed profit forecasts and metals prices tumbled. The MSCI Asia Pacific Index retreated 2.1 percent.

    Worst Month

    The MSCI World of 23 developed countries has slumped 20 percent in October, headed for the worst month since records began in 1970, as central banks and governments from Washington and London to Beijing and Tokyo stepped up efforts to salvage the global economy amid the deepest financial crisis since the Great Depression.

    This month's sell-off erased more than $9.5 trillion from the value of stocks worldwide, almost one-third of the total value lost this year, as credit-related losses and writedowns by financial firms topped $684 billion.

    Stocks rebounded this week, with the MSCI World climbing back from a five-year low reached on Oct. 27, amid signs the paralysis in credit markets was easing.

    The Federal Reserve cut rates this week for the second time this month and provided $120 billion to South Korea, Singapore, Brazil and Mexico to unlock lending in emerging markets. The Bank of Japan today joined central banks from China, Hong Kong and Taiwan in also reducing borrowing costs. European Central Bank President Jean-Claude Trichet said Oct. 27 he may lower rates next week as the financial crisis damps inflation.

    Economy Contracting

    U.S. stocks rose yesterday after a report showed the world's largest economy contracted less than forecast in the third quarter.

    In Europe, reports today indicated consumer confidence in the U.K. slumped in October close to the weakest level since at least 1974, while retail sales in Germany, Europe's largest economy, fell more than economists expected in September as the financial crisis discouraged people from spending.

    L'Oreal sank 9.1 percent to 55.29 euros. The cosmetics maker cut sales and profit forecasts for the third time in less than four months. Third-quarter sales increased 3.4 percent to 4.27 billion euros ($5.5 billion), missing the 4.36 billion-euro median estimate of nine analysts surveyed by Bloomberg News.

    BT Group slumped 21 percent to 112.9 pence. Second-quarter earnings missed its targets amid the economic slowdown. Earnings before interest, taxes, depreciation and amortization as well as earnings per share were ``slightly below expectations'' in the three months through September, the company said.

    BHP, Akzo

    BHP Billiton declined 2.5 percent to 982.5 pence. Copper fell 4 percent to $4,035 in London, headed for its worst month since at least 1986, amid signs the global financial crisis is curbing demand for raw materials.

    Akzo Nobel NV, the biggest maker of coatings and paints, slipped 1.4 percent to 30.55 euros. Credit Suisse Group AG cut its recommendation on the shares to ``underperform'' from ``neutral.'' The outlook has ``become worse'' since the company reported earnings, London-based analyst Rhian Tucker wrote in a note to clients today.

    Earnings for the 712 companies in western Europe that reported results since Oct. 7 declined 3.9 percent on average, trailing analysts' expectations by 2.2 percent, according to data compiled by Bloomberg.

    Sanofi-Aventis SA rose 1.5 percent to 47.86 euros after France's largest drugmaker raised its forecast for a second time this year and reported third-quarter profit that beat analyst estimates. Net income excluding some items was 1.92 billion euros ($2.46 billion), or 1.47 euros a share, beating the median 1.41-euro estimate of five analysts surveyed by Bloomberg.

    Profit Outlook

    Analysts have cut profit forecasts this year as the credit turmoil spread and threatened economic growth. Earnings for companies in the Stoxx 600 will decline 4.4 percent in 2008, down from 11 percent growth predicted the start of the year, according to estimates compiled by Bloomberg.

    A recent New York Times/CBS poll showed Barack Obama with 52 percent support among likely voters, compared with 41 percent for John McCain before the national election on Nov. 4. The poll was taken Oct. 25-29.

    Election history shows U.S. stocks have a better chance in the first year of a Obama presidency than a McCain administration.

    Since 1900, the Dow Jones Industrial Average rose 9.8 percent in the 12 months after the Democratic Party captured the White House, based on the median change following the election of seven Democrats from Woodrow Wilson to Bill Clinton. Only twice did the average decline, after Wilson's victory in 1912 and Jimmy Carter's in 1976. The S&P 500 index is down 18 percent this month.


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