Jan. 28 (Bloomberg) -- Stocks retreated in Europe and Asia, led by commodity producers and banks, on growing concern the global economy is slowing and companies may report more losses linked to subprime mortgages. U.S. index futures dropped.

Antofagasta Plc and Total SA followed metals and oil prices lower. Barclays Plc and Royal Bank of Scotland Group Plc declined in London as Dresdner Kleinwort predicted more writedowns, while Mitsubishi UFJ Financial Group Inc. slid in Tokyo after Goldman, Sachs & Co. said Japan is probably in a recession. Societe Generale SA, which last week said it suffered the biggest trading fraud in banking history, sank to a three-year low in Paris.

The MSCI World Index lost 1 percent to 1,424.6 at 12:44 p.m. in London, extending its decline from a record on Oct. 31 to 15 percent. More than 1,500 stocks retreated, compared with 350 advancing today, as all 10 industry groups declined. Standard & Poor's 500 Index futures slipped 0.5 percent, while China's CSI 300 Index fell to the lowest since November.

``What's worrying us is the specter of a recession,'' said Emmanuel Soupre, who helps oversee about $15.6 billion at Neuflize Gestion in Paris. ``A few weeks ago, no one was capable of determining whether we were facing a slowdown or a recession. The more time passes, the more the ghost of a recession appears. We're convinced stocks can fall farther.''

Europe's Dow Jones Stoxx 600 Index lost 1.9 percent. France's CAC 40 slid 1.8 percent. The U.K.'s FTSE 100 sank 2.1 percent, and Germany's DAX retreated 1.4 percent.

European Stocks

The Stoxx 600 has been whipsawed this month, posting its biggest loss since the Sept. 11 terrorist attacks on Jan. 21 and its biggest gain since 2003 on Jan. 24. The Jan. 21 slump pushed the index into a bear market -- commonly defined as a 20 percent decline in a 12-month period.

``This isn't the time to go into the market,'' said William de Vijlder, chief investment officer at Fortis Investment Management in Brussels, which oversees $191 billion. ``We'll still see a lot of volatility.''

The MSCI Asia Pacific Index lost 3 percent, snapping a three-day, 10 percent rally. The index's volatility today jumped to 62, the highest since October 1998, according to Bloomberg data. Japan's Nikkei 225 Stock Average lost 4 percent. China's CSI 300 Index slumped 6.8 percent, while Hong Kong's Hang Seng Index plunged 4.3 percent.

The MSCI Emerging Markets Index declined 2.7 percent, breaking a three-day winning streak, with markets in China, Korea, Prague, Russia and Turkey sinking more than 3 percent.

Commodity Producers

Antofagasta, the copper producer controlled by Chile's Luksic family, retreated 4.3 percent to 624 pence. Anglo American Plc, the world's second-largest mining company, sank 5.9 percent to 2,438 pence. Total, Europe's biggest oil refiner, tumbled 3.7 percent to 48.11 euros. BP Plc, the region's second-biggest oil company, lost 3.4 percent to 519.5 pence.

Copper, lead, nickel and zinc fell in London. Crude oil declined from a one-week high in New York.

Lafarge SA, the world's biggest cement maker, lost 5.4 percent to 106.42 euros. Holcim Ltd., the second-largest, slipped 3.5 percent to 103.8 francs.

Credit Suisse Group downgraded Lafarge to ``underperform'' from ``outperform,'' and Holcim to ``underperform'' from ``neutral,'' citing the possibility of a slowdown in emerging markets and lower pricing power.

Barclays, the U.K.'s third-biggest bank, slipped 1.4 percent to 480.5 pence. Royal Bank of Scotland, the second-largest, slid 2.6 percent to 381 pence.

More Writedowns

``We expect to see larger writedowns than already announced, with Barclays and RBS most at risk,'' Dresdner wrote in a note. ``2008 looks set to be a tough year.''

Banks and insurers have led the Stoxx 600 to a 20 percent drop since June 1 as financial companies reported more than $133 billion in losses from credit investments that failed. Banks may require another $143 billion should credit-rating firms downgrade bond insurers, analysts at Barclays Capital said Jan. 25.

Irish banks including Allied Irish Banks Plc fell after UBS AG cut its ratings on the country's largest lenders, citing the impact of cooling economic growth on the commercial property market. Allied Irish, Ireland's biggest bank by market value, dropped 4.2 percent to 15.26 euros. Anglo Irish Bank Plc fell 5.9 percent to 9.24 euros.

Allied Irish and Anglo Irish were cut to ``sell'' from ``neutral'' by analysts including Ross Curran in London.

Stocks retreated in the U.S. on Jan. 25 as investors weighed the effects of credit-ratings downgrades on bond insurers, a move that would erode the value of fixed-income securities.

`Domestic Demand'

Mitsubishi UFJ, Japan's largest publicly traded bank, slid 5.3 percent to 985 yen. Sumitomo Mitsui Financial Group Inc., the second-biggest, dropped 5.3 percent to 799,000 yen.

Japan's economy probably entered a recession amid ``a slump in domestic demand,'' Tetsufumi Yamakawa, Goldman Sachs' chief Japan economist, said in a report today. Factory production will fall from a fourth-quarter peak, while consumer spending and the construction industry are both slowing, the economist said.

A U.S. government report due on Jan. 30 is expected to show growth weakened to a 1.2 percent annual rate from October to December, a quarter of the previous three months' pace, according to a Bloomberg survey of economists.

The U.S. Federal Reserve last week cut lending rates by 0.75 percentage point, the biggest reduction in 23 years, to avert an economic recession and as equities tumbled worldwide. Interest- rate futures show traders expect the Fed will cut rates by an additional half percentage point Jan. 30.

Increasing Risks

Bankers meeting at the Swiss ski resort of Davos said there are increasing risks of a global recession, while manufacturers countered that they have yet to feel it in their business.

Economists at Goldman Sachs, Morgan Stanley and Merrill Lynch & Co. project the U.S. will this year suffer its first recession since 2001. Michael Dell, chief executive officer of Dell Inc., the world's second-largest maker of personal computers, said there's no reason ``to get in a panic.''

Societe Generale slid 6.9 percent to 68.79 euros, the lowest since August 2004. The French bank that last week said it suffered the biggest trading fraud in banking history, was cut to ``sell' from ``buy'' at Citigroup Inc. France's second-biggest bank by market value has been ``severely impaired'' by the 4.9 billion-euro ($7.2 billion) loss caused by a rogue trader, Citigroup said.

The brokerage cut its price estimate on the shares to 65 euros from 130 euros apiece, implying a possible decline of 12 percent from current levels.

U.K. homebuilders retreated after a report that the country's housing market will stagnate. U.K. home prices probably won't pick up until mid-2009, according to Instant Access Group, the country's biggest property investment club.

U.K. Builders

Barratt Developments Plc, the U.K.'s second-largest house builder by volume, sank 4.7 percent to 435.5 pence. Bellway Plc, a U.K. homebuilder aimed at first-time buyers, dropped 2.5 percent to 829.5 pence. Bovis Homes Group Plc, the U.K.'s most profitable house builder, declined 3.9 percent to 609.5 pence.

Nokia Oyj slid 2.9 percent to 23.49 euros. Morgan Stanley lowered its share-price estimate for the world's largest mobile phone maker to 27 euros from 30. ``The one risk we see is a meaningful slowdown in Europe, which accounts for a quarter of volume,'' London-based analyst Adnaan Ahmad wrote in a note.

JPMorgan Chase & Co. also cut its price projection to 27 euros from 30. The valuation of the industry has fallen, analysts including London-based Rod Hall wrote to clients.

Alliance Data

Alliance Data Systems Corp.'s said its $6.6 billion takeover by Blackstone Group LP won't get approval by the U.S. Comptroller of the Currency. The shares dropped 44 percent to $36.50.

Fortis climbed 6 percent to 14.06 euros. Belgium's biggest financial-services company said yesterday it meets capital and solvency requirements even when its holdings in subprime collateralized debt obligations are valued under ``very stringent scenarios.''

The shares tumbled 10 percent Jan. 25 on concern the Brussels-based company would have to sell new shares to strengthen its capital, traders said.

``There's a lot of nervousness and volatility in the market,'' said Chicuong Dang, an analyst at Richelieu Finance in Paris. ``There are still fears of writedowns by banks.''

To contact the reporter on this story: Alexis Xydias in London at axydias@bloomberg.net.

Last Updated: January 28, 2008 08:07 EST