Feb. 28 (Bloomberg) -- Stocks fell in Europe and Asia as Rhodia SA, Bayer AG and Vontobel Holding AG reported profit that missed analysts' estimates and Japanese factory output dropped, dimming the outlook for earnings. U.S. index futures declined.

Rhodia, France's largest maker of specialty chemicals, slumped the most in four years in Paris. Tokyo Electron Ltd., the world's second-largest producer of semiconductor-making equipment, retreated in Tokyo after Japan's factory production declined at twice the pace economists predicted. Dell Inc. of the U.S. slipped in Frankfurt before reporting earnings.

The MSCI World Index decreased 0.5 percent to 1,490.48 at 10:42 a.m. in London, snapping a five-day winning streak. Futures on the Standard & Poor's 500 Index lost 0.6 percent.

``Caution is dominating the scene,'' said Guillaume Duchesne, a Geneva-based strategist at Fortis Private Banking, which oversees the equivalent of $117 billion. ``Analysts' forecasts in the past quarters have been optimistic. We risk significant earnings revisions in Europe. The context isn't favorable for stocks.''

The MSCI World has dropped 6.2 percent this year on concern the collapse of U.S. subprime mortgages and a slowdown in the world's largest economy will drag down global profit growth.

Analysts have cut their estimates for Dow Jones Stoxx 600 Index members' 2008 earnings growth to 6.9 percent from 11 percent at the end of last year, Bloomberg data show. UBS AG, Europe's largest bank by assets, this month reported a record loss because of writedowns on subprime-linked securities. Heineken NV, the biggest Dutch brewer, last week posted a decline in profit on surging prices for raw materials.

Stoxx 600

Europe's Stoxx 600 declined for a second day, losing 0.9 percent. The MSCI Asia Pacific Index fell 0.5 percent, halting a three-day, 4.1 percent rally. The measure advanced 13 percent through yesterday since reaching a 14-month low on Jan. 22.

National indexes slipped in 14 of the 18 western European markets. France's CAC lost 0.9 percent as did Germany's DAX. The U.K.'s FTSE 100 retreated 0.8 percent.

Rhodia sank 13 percent to 18.53 euros, the steepest retreat since December 2003, after cost increases forced the company to drop its profit-margin target. Rhodia abandoned its goal, set in 2005, for annual earnings before interest, taxes, depreciation and amortization exceeding 15 percent of sales, Chief Executive Officer Jean-Pierre Clamadieu said.

Earnings before interests, tax, amortization and depreciation in the fourth quarter climbed to 199 million euros ($300 million) from 195 million euros, the company said. Analysts predicted 204 million euros, according to an average of five estimates compiled by Bloomberg.

Bayer Declines

Bayer slid 2.6 percent to 52.70 euros. The company said fourth-quarter profit fell 78 percent to 67 million euros after a one-time tax gain boosted year-earlier results. Profit of 210 million euros was expected, according to a Bloomberg survey.

Vontobel retreated 6.1 percent to 37.65 Swiss francs. The Swiss private bank that specializes in derivatives trading said 2007 profit rose 1 percent to 258.6 million Swiss francs ($243 million) on higher fee income and assets under management. That trailed analysts' estimates.

Strategists at New York-based Morgan Stanley this week said earnings in Europe may decline 16 percent this year. The firm, ranked first for its European equity strategy in last year's Thomson Extel survey, predicted earnings in the region probably rose 4 percent in 2007 and may increase 3 percent next year.

Tokyo Electron

Tokyo Electron slumped 4.6 percent to 6,900 yen. IHI Corp., Japan's third-largest maker of heavy machinery, dropped 3.2 percent to 211 yen.

Japanese companies cut output 2 percent in January from December, when production rose 1.4 percent, the Trade Ministry said today in Tokyo. Economists expected a 0.8 percent decline, according to a Bloomberg News survey.

Dell lost 21 cents to $20.56 in Germany. The company, whose stock is down 15 percent this year, may post 12 percent sales growth when it reports earnings today after U.S. markets close. Analysts, on average, predict $16.2 billion in revenue for the fourth quarter ended Feb. 1. Profit probably rose 8.1 percent to $784.9 million, according to a Bloomberg survey.

Rentokil Initial Plc tumbled 24 percent to 79.8 pence. The stock had its biggest drop in London trading after saying 2008 earnings will plunge on lost contracts and ``poor management'' at the City Link parcel-delivery division.

Profit will fall ``significantly'' after an ``unacceptable performance'' from City Link, Rentokil Chief Executive Officer Doug Flynn said on a conference call today.

InBev Rallies

InBev NV jumped 8.5 percent to 57.46 euros, the biggest gain in the Stoxx 600. The world's largest brewer said fourth- quarter profit more than doubled to 900 million euros, surpassing analysts' estimates, on sales of Beck's lager and Brahma beer in Latin America and eastern Europe.

Pernod Ricard SA added 2.7 percent to 72.87 euros. The world's second-largest liquor maker said first-half profit increased 18 percent, surpassing analysts' estimates, on higher consumption of Chivas Regal whiskey and Martell cognac in Asia. The company boosted its earnings forecast for the second time this year.

The rallies by InBev and Pernod pushed a gauge of European food and beverage companies up 0.4 percent, the only advance among 18 groups in the Stoxx 600.

To contact the reporter on this story: Adria Cimino in Paris at acimino1@bloomberg.net.

Last Updated: February 28, 2008 05:59 EST