May 11 (Bloomberg) -- European stocks, U.S. index futures and commodities retreated on speculation that prices have risen too fast as the global recession curbs earnings and Chinese demand for raw materials.

The Dow Jones Stoxx 600 Index of European stocks fell 1.5 percent at 1:21 p.m. in London, retreating from the highest level since January as BHP Billiton Ltd. led a slump in resource companies and TUI AG reported profit that missed analysts’ estimates. Futures on the Standard & Poor’s 500 Index slipped 1.5 percent. Crude oil fell from a six-month high and copper decreased for a third day. The yen strengthened against 15 of its 16 most-actively traded peers, while the euro fell.

Companies in the Stoxx 600 are valued at 21.4 times earnings, the most expensive since April 2004, while the S&P 500 traded at a ratio of 15.1, the highest since October, weekly data compiled by Bloomberg show. Chinese demand for imported copper may slow in coming months, Citigroup Inc. analysts led by Alan Heap wrote in a report today.

“The market has gone too quick and too far in one direction,” said Martin Huefner, Munich-based chief economist at Assenagon. “In the last few weeks, we only saw good news.”

A measure of commodities shares in the Stoxx 600 slid 3.2 percent, the second-steepest decline among 19 industry groups. London-based BHP Billiton, the world’s biggest mining company, dropped 2.5 percent to 1,496 pence. TUI, the Hanover, Germany- based owner of Europe’s biggest travel company, sank 9.7 percent to 7.27 euros after first-quarter net income missed analysts’ estimates because of increased tourism losses.

‘Tough’ Year

HSBC Holdings Plc, Europe’s biggest bank, retreated as much as 4.6 percent to 551.25 pence. The London-based company’s Chief Executive Officer Michael Geoghegan said 2009 will be a “tough” year as bad loans increase and the economy deteriorates, while Asia remains “resilient.”

HSBC posted a profit of $6.6 billion on its debt, compared with $2.5 billion in same period last year. Bad loan provisions in the U.S. rose to $3.95 billion from $3.19 billion.

Crude oil for June delivery fell as much as 3.2 percent to $56.78 a barrel on the New York Mercantile Exchange, amid speculation last week’s 10 percent advance won’t last as global production increases. Copper for three-month delivery dropped as much as 3.7 percent to $4,510 a metric ton on the London Metal Exchange. Aluminum, nickel and zinc also retreated.

Yen, Won, Dollar

The yen and South Korean won led a rally in Asian currencies, with the won climbing to its highest level in almost seven months against the dollar.

The euro weakened for the first time in four days versus the dollar as investors bet gains that drove it to the highest level in seven weeks were overdone given the pace of the economic recovery. The common currency dropped to $1.3592, from $1.3634, and to 133.19 yen, from 134.23.

“Some observers seem to be worrying about a relapse into recession after a temporary recovery,” Riccardo Barbieri, head of international economics, global rates and currencies research at Bank of America-Merrill Lynch in London, wrote in a report today.

The Washington-based International Monetary Fund predicts the global economy will shrink as much as 1 percent this year. Earnings for S&P 500 companies will slide 35 percent this quarter and 23 percent in the July to September period, according to analyst estimates compiled by Bloomberg.

Treasuries rose before purchases by the Federal Reserve today of securities maturing from August 2026 to 2039. The yield on the 30-year bond fell six basis points to 4.22 percent.

Default Swaps, Libor

The cost of protecting European corporate bonds from default rose, according to traders of credit-default swaps. Contracts on the Markit iTraxx Crossover Index of 45 companies with mostly high-risk, high-yield credit ratings increased 15 basis points to 755, according to JPMorgan Chase & Co. prices. The index is a benchmark for the cost of protecting bonds against default and an increase signals deteriorating perceptions of credit quality.

The London interbank offered rate, or Libor, for three- month loans in dollars declined two basis points to 0.92 percent today, according to the British Bankers’ Association. The Libor -OIS spread, a barometer of banks’ unwillingness to lend, fell two basis points to 72, the lowest level since July.

“The direction is definitely down for Libor but we’re not out of the woods yet,” said Brian Delany, a money-market trader on the dollar desk at Bank of Ireland Plc in Dublin. “The market may be getting a little ahead of itself in calling this recovery.”

To contact the reporters on this story: Daniel Hauck in London at dhauck1@bloomberg.net.

Last Updated: May 11, 2009 08:27 EDT