Global Stocks, U.S. Futures Decline; Bradford & Bingley Drops
By Adria Cimino
Sept. 5 (Bloomberg) -- European and Asian stocks fell, led by banks on concern increasing borrowing costs will hurt profits. U.S. index futures dropped.
Bradford & Bingley Plc paced a decline in Europe after Lehman Brothers Holdings Inc. cut its recommendation on shares of the U.K. mortgage bank, saying rising loan costs may erode earnings. Mizuho Financial Group Inc., Japan's second-biggest bank, fell the most in more than two weeks after the country's chief financial regulator said he will monitor banks' credit- market losses. JPMorgan, Chase & Co. slipped in Germany.
The Morgan Stanley Capital International World Index lost 0.2 percent to 1,569.56, while U.S. Standard & Poor's 500 Index futures slipped 6.1 percent to 1,483.5 as of 9:25 a.m. in London.
``Serenity hasn't returned to the market yet,'' said Salah Seddik, a fund manager at Richelieu Finance in Paris, which oversees $5 billion. ``The market remains nervous. News in the Asian markets wasn't good, and any bad news weighs on stocks.''
The rate banks charge each other for three-month loans in dollars climbed to its highest in almost seven years yesterday as U.S. subprime-mortgage losses made banks reluctant to lend. The Bank of England and the European Central Bank are scheduled to decide on interest rates tomorrow.
Money-market rates are ``the first barometer of the crisis,'' said Roland Lescure, chief investment officer at Groupama Asset Management in Paris, which oversees $120 billion. ``It reflects the lack of confidence of financial institutions. We don't yet know the impact on banks' earnings.''
Stoxx 600, Nikkei
Europe's Dow Jones Stoxx 600 Index fell 0.3 percent to 378.53. National benchmarks dropped in 12 of the 17 western European markets that were open. Germany's DAX Index lost 0.2 percent, while France's CAC 40 slipped 0.3 percent. The U.K.'s FTSE 100 added 0.1 percent.
Japan's Nikkei 225 Stock Average dropped 1.6 percent to 16,158.54. Markets also fell in Australia, South Korea, Taiwan, Indonesia and Vietnam.
Bradford & Bingley, which provides about one in five loans to U.K. landlords, decreased 1.7 percent to 376.25 pence. The shares were cut to ``underweight'' from ``overweight'' at Lehman Brothers.
``Uncertainties in asset-backed markets and rising wholesale funding costs are likely to affect earnings within the sector and specifically at Bradford and Bingley,'' the analysts wrote.
Mizuho Financial Group declined 2.4 percent to 702,000 yen, the most since Aug. 17. Sumitomo Mitsui Financial Group Inc., Japan's third-largest bank, dropped 1.5 percent to 872,000 yen, its lowest since September 2005.
Japan's Financial Regulator
Japan's chief financial regulator Yoshimi Watanabe said the government is watching finance companies' half-year earnings for any losses related to the U.S. subprime mortgage crisis.
JPMorgan, the third-largest U.S. bank by assets, slipped 33 cents to $44.97 in Germany.
Michelin & Cie. fell 1.5 percent to 92.47 euros. Rubber futures in Tokyo rose to the highest in four weeks. The contract for February delivery on the Tokyo Commodity Exchange climbed to as much as 253.3 yen a kilogram ($2,183 a metric ton), the highest since Aug. 9.
Stora Enso Oyj slipped 1.5 percent to 12.88 euros. The world's largest papermaker said it will book a 1.3 billion-euro ($1.77 billion) impairment charge this quarter. The company will also reorganize to eight business units.
Hochtief AG advanced 1.5 percent to 80.68 euros. Germany's biggest construction company made a bid for Deutsche Bahn AG's real-estate unit Aurelis for about 1.6 billion euros.
Vedanta Resources Plc climbed 4.5 percent to 1,872 pence. Shares of India's largest producer of copper and zinc rose to a record in London trading after Merrill Lynch & Co. added the stock to its ``Europe 1'' list.
Anglo Irish Bank Plc added 2.1 percent to 14.45 euros. The country's third-largest lender by market value said earnings for the year ending in September will exceed analysts' estimates as it increases lending.
BP Plc added 1.3 percent to 568.5 pence. Europe's second- biggest oil company was raised to ``outperform'' by Sanford C. Bernstein & Co. because of new fields set to start production and improved refinery performance.
Crude oil traded near a four-week high in New York as rising U.S. share prices bolstered investor confidence in economic growth. The contract for October delivery rose as much as 0.3 percent to $75.30 on the New York Mercantile Exchange.
Statoil ASA gained 2.5 percent to 175.5 kroner. Citigroup Inc. upgraded shares of Norway's largest oil and gas company to ``buy'' from ``sell.'' Citigroup raised its price estimate by 15 percent to 195 kroner.
Last Updated: September 5, 2007 04:39 EDT