European Stocks, U.S. Futures Fall; Axa, British Airways Drop

By Andreas Hippin


Nov. 7 (Bloomberg) -- European stocks declined, led by insurers, carmakers and airlines, as the dollar dropped to a record low against the euro and oil surpassed $98 a barrel. U.S. index futures also retreated.

Axa SA, Europe's second-largest insurer, and luxury carmaker Bayerische Motoren Werke AG paced the drop by companies that depend on the U.S. for sales. British Airways Plc led travel shares lower, while Clariant AG declined the most in more than four years after the chemical maker posted an unexpected loss. General Motors Corp. of the U.S. fell in German trading.

The Dow Jones Stoxx 600 Index lost 0.6 percent to 376.34 as of 10:59 a.m. in London. Standard & Poor's 500 Index futures expiring in December slipped 1 percent to 1,509.4.

``Investors are getting increasingly concerned about the outlook for corporate earnings,'' said Richard Scott, who helps oversee about $1 billion at Iimia Investment Group in Exeter, England. ``The sharp fall in the dollar is likely to hurt exporters. At the same time rising commodity costs will impact on margins and consumer incomes.''

The risk of European companies defaulting on their debt rose, according to traders of credit-default swaps. U.S. two-year notes advanced.

National benchmarks declined in all 18 western European markets except Luxembourg and Norway. The U.K.'s FTSE 100 slid 0.7 percent. France's CAC 40 sank 0.4 percent, and Germany's DAX decreased 0.5 percent. The Stoxx 50 lost 0.4 percent, as did the Euro Stoxx 50, a measure for the euro region.

Axa, BMW

Axa declined 1.2 percent to 28.91 euros, and Aegon NV, the second-biggest Dutch insurer, fell 1.4 percent to 13.30 euros. The U.S. makes up more than 15 percent of the Axa's revenue. The America's are Aegon's biggest market, generating more than a third of last year's sales.

BMW, which gets about a quarter of its sales in North America, retreated 2.2 percent to 42.38 euros. Continental AG decreased 2.2 percent to 99.01 euros. The world's fourth-biggest tiremaker generates more than a fifth of its revenue in the U.S.

The dollar slid to a record low against the euro after a Chinese government adviser said plans to diversify foreign exchange reserves will involve buying better-performing currencies.

``Uncertainty is increasing,'' said Raimund Saxinger, a fund manager who helps manage the equivalent of $17 billion at Frankfurt Trust. ``Negative factors such as the weak dollar, the high oil price and higher borrowing costs are weighing on profit outlooks. Profit growth momentum is slowing.''

British Airways

British Airways, Europe's third-largest airline, declined 3.1 percent to 377 pence. Air France-KLM, the region's biggest airline, dropped 1.2 percent to 23.68 euros.

Fuel expenses make up about 30 percent of total costs for airlines, according to calculations by Credit Suisse Group.

Crude oil for December delivery climbed as much as $1.92, or 2 percent, to $98.62 a barrel in after-hours electronic trading on the New York Mercantile Exchange, the highest since trading began in 1983.

Clariant plummeted 15 percent to 12.15 francs. The third- quarter net loss totaled 51 million francs ($44.9 million), or 23 centimes a share. Analysts in a Bloomberg survey predicted a 52 million-franc profit.

General Motors Corp. lost $2.63 to $33.53 in Germany. The world's largest automaker probably will report its biggest ever quarterly loss after it writes down $39 billion of future tax benefits. The writedown tops the $21 billion posted for an accounting change for the first three months of 1992.