By Sarah Jones and Sarah Thompson
July 4 (Bloomberg) -- European stocks dropped, capping their fifth weekly decline, on concern banks will post more writedowns and near-record oil will curb airlines' profits. Canada's benchmark index and most shares in Brazil and Asia also fell.
Banco Santander SA slid the most since February after Goldman Sachs Group Inc. downgraded the shares and said European banks may need to raise as much as $141 billion. Bradford & Bingley Plc tumbled to the lowest since 2000 as TPG Inc. dropped plans to buy a stake in the U.K. mortgage lender. British Airways Plc slumped as crude traded above $144 a barrel. Goldcorp Inc. followed gold prices lower in Toronto.
U.S. markets were closed for Independence Day.
Europe's Dow Jones Stoxx 600 Index slipped 1.3 percent to 279.53, extending this week's retreat to 2.7 percent. The fifth straight weekly drop is the longest losing streak since a seven- week slump ending Jan. 25.
``Markets around the world have had a rough ride and news flow remains challenging,'' said Andreas Nigg, head of international equities Vontobel Asset Management in Zurich, which oversees $39 billion. ``The banks are not in good shape, and it will get harder to raise capital. Oil is still going up. It's like a tax that keeps getting worse.''
Canada's Standard & Poor's/TSX Composite Index fell 0.9 percent as retreating metals prices dragged down raw-materials producers. Brazil's Bovespa index climbed 0.2 percent, while most stocks in the index declined.
The MSCI Asia Pacific Index was little changed as the measure completed a four-week, 12 percent slide, the longest streak of declines since the period ended Feb. 8. Nine stocks fell for every eight that rose.
Futures on the Standard & Poor's 500 Index fell 0.7 percent.
Global Rout
Stocks slumped worldwide this week, sending the MSCI World Index to its fifth weekly drop, its longest retreat since August 2007. More than $11 trillion has been erased from global equity markets this year as concern deepened that credit-related losses topping $400 billion, record oil prices and accelerating inflation will stifle economic and profit growth.
``It's really hard to find good reasons to buy stocks in the very short term,'' said Sergi Martin, who oversees $9 billion as chief executive officer at Credit Andorra's Credit Invest asset management unit in Andorra LaVella, Andorra. ``The focus is oil right now. And in banks I would wait for a good opportunity before buying.''
Banco Santander, Spain's biggest bank, lost 4.3 percent to 11.34 euros, after Goldman downgraded the shares to ``neutral'' from ``buy.''
Bank Ratios
European banks may need to raise as much as 90 billion euros ($141 billion) to keep their financial ratios at current levels amid a decline in credit markets, Goldman said.
Swedbank AB, the largest bank in the Baltic states, dropped 5.7 percent to 111.75 kronor. Goldman lowered its recommendation for the shares to ``sell'' from ``neutral.''
Bradford & Bingley fell 18 percent to 50 pence, the lowest since its initial public offering in December 2000, after TPG withdrew a 179 million-pound ($354 million) offer for a 23 percent stake in the Bingley, England-based lender.
Britain's largest lender to landlords will continue with the capital-raising announced June 2 through an enlarged rights offer, the bank said. The rights offer is supported by some of the largest shareholders, including Legal & General Group Plc, Standard Life Plc., M&G Investment Managers and Insight Investment Management.
British Airways, Europe's third-largest airline, dropped 5.7 percent to 197 pence. Air France-KLM Group SA, Europe's biggest airline, declined 1.7 percent to 14.15 euros.
Oil, Inflation
``The focus is still very much strongly on the oil price because inflation is mainly driven by the oil price,'' said Bernd Meyer, head of pan-European equity strategy at Deutsche Bank AG in London.
Crude oil for August delivery yesterday climbed to $145.85 a barrel, the highest since trading began in 1983. It slipped 0.9 percent to $144.04 a barrel in New York electronic trading at 3:01 p.m.
Goldcorp, the world's second-largest bullion mining company, fell 2.8 percent to C$45.30. Gold, silver, platinum and palladium dropped in London.
Anglo American Plc led mining shares lower in Europe as Goldman downgraded basic-resources shares to ``neutral,'' saying investor concerns about the impact from higher inflation will likely weigh on confidence in the sector.
``We are taking profits in basic resources,'' London-based analyst Peter Oppenheimer wrote in a note to investors. We have a ``view to upgrade again when risks subside.''
Mining Companies
Anglo American, the world's second-biggest mining company, lost 3.7 percent to 3,148 pence. Vedanta Resources Plc, India's largest zinc producer, declined 2.1 percent to 1,980 pence.
Marks & Spencer Group Plc lost 3.8 percent to 227 pence, dropping for a seventh day. Citigroup Inc. downgraded the U.K.'s biggest clothing retailer to ``sell'' from ``buy'' after the company reported falling sales amid a slump in consumer spending.
BCE Inc. advanced 13 percent to C$39.74, its biggest gain in more than six years. Canada's largest phone company signed a final agreement with a group led by the Ontario Teachers' Pension Plan to complete the world's largest leveraged buyout for the original price of $51 billion.
Gerdau SA, Latin America's biggest steelmaker, lost 2.9 percent today to 33 reais on concern it won't be able to pass on the costs of higher raw materials after BHP Billiton Ltd. won a price increase of as much as 97 percent for iron ore sold to Baosteel Group Corp.
Profit Margins
``There is a limit on how much cost they can pass on'' to customers, said Andre Segadilha, head of research at Prosper Corretora in Rio de Janeiro. Usinas Siderurgicas de Minas Gerais SA fell 1.8 percent to 67 reais.
The BHP price increase benefits iron-ore producers such as Cia. Vale do Rio Doce, the world's biggest, Segadilha said. Vale gained 1.2 percent to 43.21 reais.
Light SA added 6.3 percent to 21.92 reais. Brazil's second- biggest electricity distributor jumped the most in two months in Sao Paulo trading on speculation shareholders will cancel a share sale due to declines in global equity markets.
EarthFirst Canada Inc. fell 4.1 percent to C$1.40. The developer of wind energy projects in Canada revised the capital cost estimate for its Dokie 1 project to C$360 million from C$325 million.
To contact the reporter on this story: Sarah Jones in London at sjones35@bloomberg.net; John Kipphoff in Toronto at jkipphoff@bloomberg.net.
Last Updated: July 4, 2008 17:11 EDT
