Global Stocks, U.S. Futures Fall; SocGen, Westpac
Banking Drop
By Sarah Jones
Aug. 28 (Bloomberg) -- Stocks in Europe and Asia
declined, led by financial companies on concern the
subprime mortgage rout is spreading and will erode
global economic growth. U.S. stock- index futures also
fell.
Societe Generale SA and Deutsche Bank AG led the
retreat in Europe. Westpac Banking Corp. sank after
Australia's central bank said the country's money
market remains ``under pressure'' as losses related to
subprime mortgages in the U.S. discouraged lending.
Bear Stearns Cos. dropped in European trading.
The Morgan Stanley Capital International World Index
slipped 0.3 percent to 1,548.48 as of 11:12 a.m. in
London. Futures on the Standard & Poor's 500 Index
dropped 0.3 percent to 1,465.6.
``Investor sentiment is quite poor and I think it will
remain quite poor for some time,'' said Andrew
Milligan, head of global strategy at Standard Life
Investment in Edinburgh, which manages $265 billion in
assets. ``This is not a problem with one institution.
It's a financial sector problem.''
U.S. stocks fell yesterday after a report showed the
glut of unsold homes rose to a 16-year high last month
and Lehman Brothers Holdings Inc. warned of
``extraordinary weakness'' in the market for loans
held by Countrywide Financial Corp., the biggest U.S.
home lender. Asian financial shares retreated today.
National benchmarks dropped in all 18 western European
markets. Germany's DAX lost 0.2 percent, France's CAC
40 slipped 0.9 percent and the U.K.'s FTSE 100
declined 0.6 percent. U.K. markets were closed for a
public holiday yesterday.
Yen Strengthens
The yen strengthened against all 16 major currencies
on speculation banks will report more credit-market
losses, prompting traders to pare higher-yielding
investments funded by loans in Japan. U.S. 10-year
Treasury notes fell for the first time in three days
as yields near the lowest in five months deterred
investors.
German business confidence dropped for a third month
in August after a lack of available credit clouded the
outlook for economic growth. A report later today in
the U.S. may show consumer confidence slid in August
from its highest level in almost six years, as
tumbling stock prices and lower home values left
Americans feeling less wealthy, economists said.
The Conference Board will release its survey at 10
a.m. New York time.
Societe Generale, France's second-largest bank, lost 2
percent to 117.56 euros. Deutsche Bank, Europe's
biggest investment bank, sank 1.5 percent to 90.28
euros.
Barclays Plc, the third-biggest U.K. bank, retreated
2.5 percent to 595.5 pence. The bank rebuffed a
newspaper report that it provided funding to an
investment unit for Landesbank Sachsen Girozentrale,
the German public lender squeezed by a global credit
crunch.
FT Report
The Financial Times today said the Barclays Capital
securities unit has ``exposure'' in the ``low hundreds
of millions of dollars'' to failed debt funds, citing
people familiar with the matter. The bank created a
unit, known as a SIV-Lite, for Sachsen LB in May, with
assets of about $3 billion mostly invested in
securities backed by prime and subprime U.S.
mortgages, the newspaper reported.
``Barclays has provided no funding at any time to the
Sachsen SIV-Lite,'' London-based Barclays spokesman
Will Bowen said. ``Any report to the contrary is
inaccurate.'' Reports of ``exposure'' to debt units
worth hundreds of millions of dollars are also
``inaccurate,'' he said.
Westpac Banking, Australia's oldest bank, sank 1.1
percent to A$26.75. Australia's money market remains
``under pressure'' and the central bank will intervene
if needed to stabilize the cost of credit amid U.S.
subprime losses, Reserve Bank Deputy Governor Ric
Battellino said today.
DBS Group Holdings Ltd. retreated 2.9 percent to
S$19.80 in Singapore after Southeast Asia's largest
lender said it has more collateralized debt
obligations than previously disclosed.
Bear Stearns Downgrade
Bear Stearns lost 89 cents to $111.31 in Germany after
Merrill Lynch & Co. lowered its recommendation for the
biggest broker to hedge funds to ``neutral'' from
``buy.''
The brokerage also downgraded shares of Lehman
Brothers Holdings Inc. and Citigroup Inc. to
``neutral'' from ``buy.''
Retailers paced the decline in Europe. Tesco Plc,
Britain's biggest retailer, lost 1 percent to 416
pence. Royal Ahold NV, the Dutch owner of the U.S.
Stop & Shop supermarket chain, declined 1.3 percent to
9.38 euros.
Deutsche Post AG dropped 3.7 percent to 20.69 euros
after Goldman, Sachs & Co. lowered its recommendation
for the shares to ``sell'' from ``buy.''
LSE, Henderson
London Stock Exchange Plc climbed 1.1 percent to 1,328
pence after Reuters reported that NYSE Euronext and
Australia's ASX Ltd. may be considering buying part of
Nasdaq Stock Market Inc.'s stake in the U.K. market
operator.
The Reuters report, which cited an unidentified person
familiar with the matter, was denied by Sydney-based
ASX. An NYSE Euronext spokesman and a Nasdaq
spokeswoman declined to comment.
Henderson Group Plc rallied 6.1 percent to 143.5
pence. Catherine Heath and Rae Maile, analysts at
JPMorgan Cazenove Ltd. in London, lifted their 2008
earnings-per-share estimates for the money manager by
8 percent to 10.6 pence.
Versatel AG plunged 20 percent to 11.68 euros, the
biggest decline since the German phone and Internet
company's initial public offering. Versatel posted a
wider second-quarter loss of 56.6 million euros ($77.1
million) and cut its sales and profit forecasts.
To contact the reporter on this story: Sarah Jones in
London at [EMAIL PROTECTED] ;
Last Updated: August 28, 2007 06:20 EDT
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