Oct. 22 (Bloomberg) -- Stocks fell around the world, the pound sank the most against the dollar since 1992 and commodities retreated as the economic slump deepened and corporate profits declined.

Exxon Mobil Corp., BHP Billiton Ltd. and Petroleo Brasileiro SA slid more than 7.9 percent. Argentina's Merval index posted the biggest two-day slump since 1990 after the government's plan to seize private pension funds undermined confidence in developing countries. The pound tumbled the most since investor George Soros bet against the currency 16 years ago after Bank of England Governor Mervyn King said the country is probably in a recession.

``You see the slowdown in companies and economies, and this is only the beginning,'' Philippe Gijsels, a Brussels-based senior equity strategist at Fortis Global Markets, which has $62 billion under management, said in a Bloomberg Television interview. ``You will see a very nasty shakeout.''

The Standard & Poor's 500 Index lost 6.1 percent to 896.78, the lowest since April 2003. Europe's Dow Jones Stoxx 600 Index declined 5.1 percent. The MSCI World Index of developed markets slid 6.4 percent.

The slump in oil, gold and copper dragged down Brazilian stocks, sending the Bovespa Index to a 10 percent retreat. Argentina's Merval fell 10 percent. The MSCI Emerging Markets Index lost 8.4 percent, falling to the lowest level since 2005.

Asia-Pacific

The MSCI Asia Pacific Index decreased 5.4 percent. NEC Electronics Corp. plunged 20 percent to 1,210 yen, the steepest decline since the stock started trading in July 2003. Japan's third-biggest chipmaker said it will probably report a loss this year because of decreased semiconductor demand. The company had earlier forecast that it would break even.

Analysts have reduced profit forecasts this year as losses and writedowns related to subprime mortgages topped $660 billion in the worst financial crisis since the Great Depression. Earnings for companies in the Stoxx 600 will decline 4.4 percent in 2008, down from 11 percent growth predicted at the start of the year, according to estimates compiled by Bloomberg. The projections for S&P 500 companies show a 5 percent decline in profit this year.

``We believe it's going to be a very steep and dramatic recession, certainly more dramatic than anything we've seen in the last 10 or 15 years,'' said Michael Vogelzang, who oversees $2 billion as chief investment officer at Boston Advisors LLC in Boston.

Oil's Decline

The U.S. equity benchmark lost 39 percent this year as oil tumbled more than 50 percent from its July record on concern government bailouts to save the global banking system won't avert a recession.

The next leg of losses may be fueled by collateralized debt obligations tied to corporate credit. Investors are writing down as much as 90 percent in the $1.2 trillion market following failures of Lehman Brothers Holdings Inc. and Icelandic banks.

``It's still very difficult to work out the impact from the next wave of writedowns,'' said Peter Jarvis, a London-based director of European equities at F&C Asset Management, which manages about $200 billion. ``Until confidence between banks reemerges, an end to this financial crisis remains maddeningly elusive.''

Alcoa Inc., the largest U.S. aluminum maker, had the steepest drop in the Dow Jones Industrial Average as prices for the metal dropped on concern output is still too high. The stock fell 13 percent to $10.52.

Ryder Drops

Ryder System Inc. fell 12 percent to $38.57. The largest U.S. truck-leasing company reported less third-quarter profit than analysts estimated and trimmed its 2008 earnings forecast.

The London interbank offered rate, or Libor, for three-month loans in dollars fell for an eighth day as central banks offered cash to revive lending. The measure, which banks use to charge each other for loans, dropped to 3.54 percent. It's still 2.04 percentage points more than the Federal Reserve's target rate for overnight loans.

Britain's worst banking crisis since World War I will probably push the economy into a recession, according to the country's central bank head. Home prices will continue to fall and the pound may depreciate further, King said.

Royal Bank of Scotland Group Plc, Britain's second-largest bank, slid 14 percent to 68.3 pence. Barclays Plc, the U.K.'s second-biggest, dropped 7.4 percent to 224.5 pence. Prudential Plc, an insurer, slipped 4.5 percent to 333 pence.

Interest Rates

The euro fell below $1.28 for the first time since November 2006 on speculation Europe's central banks will cut interest rates as the global economy heads for a recession. The U.K. currency dropped as much as 3.4 percent to a five-year low of $1.6139.

BHP Billiton, the world's largest mining company, slid 9 percent to 880 pence as it said ``uncertainty'' will persist in China after the economy grew at its slowest pace in five years last quarter.

Exxon fell 9.8 percent to $64.57. Petrobras tumbled 7.2 percent to 23.20 reais. Total SA lost 6.2 percent to 36.86 euros.

ConocoPhillips, the third-biggest U.S. oil producer, retreated 9.1 percent to $49.06 even after reporting quarterly profit that exceeded the average analyst estimate.

The Reuters/Jefferies CRB Index of 19 raw materials fell 4.5 percent to the lowest level since July 2004. Crude oil for December delivery declined 7.3 percent to $66.90 a barrel, a 16- month low, in New York. Copper, gold, wheat and soybeans slumped.

SanDisk Corp. plunged 32 percent, the most since January 2001, to $10.09. Samsung Electronics Co. scrapped a $5.85 billion offer to buy the world's largest maker of memory cards for digital cameras and said losses at the U.S. company may worsen as a glut forces chipmakers to cut prices.

IPhones

AT&T Inc. lost 7.6 percent to $23.78. The largest U.S. phone company posted third-quarter profit that trailed analysts' projections on costs to subsidize Apple Inc.'s iPhone 3G and declines in corporate spending.

Apple rallied 5.9 percent to $96.87 after soaring iPhone sales lifted profit and Chief Executive Officer Steve Jobs said customers will stay loyal in a recession.

Argentine stocks tumbled after President Cristina Fernandez de Kirchner proposed taking control of $29 billion of assets held in 10 privately run retirement accounts. The last time the government sought to tap workers' savings was in 2001, before it stopped servicing $95 billion of debt.

Economic growth in Latin America will likely slow to 3.2 percent in 2009, the International Monetary Fund said. Expansion in the region averaged 5 percent in the past four years, according to the IMF.

The extra yield bondholders demand to buy developing-nation debt rather than U.S. Treasuries rose 5 basis points to 6.94 percentage points, the most since March 2003, according to JPMorgan Chase & Co.

To contact the reporters on this story: Adam Haigh in London at ahaigh1@bloomberg.net; Lynn Thomasson in New York at lthomasson@bloomberg.net.

Last Updated: October 22, 2008 17:04 EDT