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European Stock Futures Crash

European Stock Futures Crash

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European Stock Futures Decline; Barclays, Rio Tinto May Retreat

European stock-index futures fell amid growing concern that the U.S. is close to entering a recession. Barclays Plc, Britain's third-largest bank, and Lloyds TSB Bank Plc may lead financial shares lower.

Rio Tinto Group, the world's third-biggest mining company, may drop after BHP Billiton Ltd. failed to make a new offer. Wolseley Plc might decline after the world's biggest distributor of plumbing reported a 25 percent slump in profit and job cuts to offset the U.S. housing recession.

Futures on the Dow Jones Euro Stoxx 50 Index, a benchmark for the euro nations, slipped 54, or 1.3 percent, to 3,974 at 7:35 a.m. in London. The U.K.'s FTSE 100 Index may decrease 59, according to CMC Markets, a betting firm.

Asian stocks declined, driving the regional benchmark to a five-month low. Markets in the U.S. are closed today for Martin Luther King Day after stocks last week posted the steepest weekly retreat since July 2002.

``Market sentiment remains weak and European stocks will once again be under pressure,'' said Oliver Stevens, head of dealing at IG Markets Ltd. in Melbourne. ``While a U.S. public holiday usually means a quiet day of trading, investors are still plagued by recession worries.''

Europe's Stoxx 600 fell last week for the sixth straight weekly decline, the longest losing streak since 1998, on concern credit-market losses and an economic slowdown will curb earnings. The gauge is down 18 percent from a 6 1/2-year high on June 1.

The euro fell to a four-month low against the yen today after European Central Bank council member Nout Wellink said economic growth may slow more than expected.

Barclays, Lloyds TSB

American depositary receipts of Barclays ended on Jan. 18 0.8 percent below the close in London. ADRs of Lloyds TSB, the U.K.'s sixth-biggest bank, closed 0.6 percent lower.

ING Groep NV, the biggest Dutch investment bank, and Aegon NV, the second-biggest Dutch insurer, might be active.

Ambac Financial Group Inc.'s insurance unit had its AAA credit rating cut to AA by Fitch Ratings Jan. 18. The downgrade ``reflects the significant uncertainty with respect to the company's franchise, business model and strategic direction,'' Fitch said in a statement.

Rio, defending a hostile $108 billion takeover bid from rival mining company BHP, fell today by 7.9 percent in Australia, the most since 1997.

BHP may not make a new offer before the Feb. 6 deadline set by the U.K.'s Takeover Panel, the London-based Times newspaper reported. The BHP board has not met to discuss a new bid, the newspaper said, after its initial three-for-one all share offer in November was rejected.

Samantha Evans, a BHP spokeswoman in Melbourne, declined to comment. Rio spokeswoman Amanda Buckley also declined to comment.

Wolseley, H&M

Lower metal prices may also weigh on mining companies. Nickel for delivery in three months slid 1 percent to $28,500 a metric ton in London. Copper, lead, zinc and aluminum prices also dropped.

Wolseley might fall after the company said five-month profit sank 25 percent as the company cut 3,000 jobs in the U.S. to counter a housing slowdown. The company gets about half of its sales from North America.

Wolseley's operating profit in North America for the five months through Dec. 31 dropped 40 percent, while sales declined 10 percent, the Reading, southern England-based company said today.

Hennes & Mauritz AB may decline. JPMorgan Chase & Co. cut its share-price estimate for Europe's second-biggest clothing retailer to 380 kronor from 447. Gross profit margin improvements may come to an end in the second quarter, London-based analysts including Richard B. Chamberlain wrote in a note, and said price competition will intensify.


Royal Philips Electronics NV may rise after the world's biggest maker of light bulbs and electric shavers said fourth- quarter profit doubled. Net income rose to 1.39 billion euros ($2 billion) from 680 million euros, a year earlier. Analysts had predicted net income of 1.23 billion euros, according to a Bloomberg survey of analysts.

Chief Executive Officer Gerard Kleisterlee has sold most of Philips' semiconductor unit and shares in Taiwan Semiconductor to raise funds for acquisitions in the appliances, medical and lighting divisions.

Galenica Holding AG might be active after Switzerland's largest drug wholesaler was downgraded to ``neutral'' from ``buy'' at Merrill Lynch & Co. on concern that its Ferinject anemia treatment won't be approved for sale in the U.S.

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