April 20 (Bloomberg) -- European stocks fell and U.S. futures retreated, sending the MSCI World Index lower after six straight weeks of gains, as sliding metals prices dragged down raw-material producers and property companies sank.

BHP Billiton Ltd. and Anglo American Plc declined more than 3 percent. Peter Hambro Mining Plc, the second-biggest gold producer in Russia, lost 11 percent after reporting a drop in profit and scrapping its dividend. Hammerson Plc and Liberty International Plc led European real-estate shares lower after downgrades from JPMorgan Chase & Co.

The MSCI World slipped 1 percent at 1:49 p.m. in London. The gauge of 23 developed nations has rebounded 27 percent since March 9 as investors speculated the U.S. government’s plan to purchase as much as $1 trillion in toxic assets from banks will help to pull the global economy out of its first recession since World War II.

Analysts estimate that profits at S&P 500 companies decreased for the seventh straight quarter in the January to March period, the longest stretch of declines since at least the Great Depression.

“It’s going to be a slow recovery,” said Julian Chillingworth, the London-based chief investment officer at Rathbone Unit Trust Management, where he helps manage around $15 billion. “We could bounce along this bottom for a little while yet,” he told Bloomberg Television.

European Stocks

Europe’s Dow Jones Stoxx 600 Index slipped 2.7 percent, the biggest drop this month. The regional gauge added 4.7 percent last week to cap the longest stretch of weekly gains since January 2006.

The MSCI Asia Pacific Index added 0.4 percent as China’s Premier Wen Jiabao said that a stimulus plan was producing “better-than-expected” results.

Futures on the Standard & Poor’s 500 Index slipped 2 percent even after Bank of America Corp. reported first-quarter profit of 44 cents a share, beating the most optimistic analyst forecasts. The benchmark index for U.S. equities climbed 1.5 percent last week, reducing its 2009 retreat to 3.7 percent, as profits at Goldman Sachs Group Inc. and JPMorgan Chase & Co. ignited a rally in bank shares.

So far, first-quarter incomes have fallen less than forecast. A total of 68 percent of the S&P 500 companies that announced results since the earnings season began two weeks ago beat Wall Street projections, data compiled by Bloomberg show.

‘Severe Shock’

Still, the rally in global stocks is likely to falter as a prolonged recession dents corporate earnings, according to State Street Global Advisors Inc. Profits at S&P 500 companies dropped 38 percent in the first quarter and may slide 32 percent in the second, according to analysts’ estimates compiled by Bloomberg.

“We’re likely to see a pullback in stock markets as earnings disappoint,” said George Hoguet, global investment strategist at Boston-based State Street Global Advisors, which oversees $1.4 trillion. “We are undergoing a severe shock and the global economy will take several quarters to get back to trend growth.”

Separately, Nouriel Roubini, the New York University professor who predicted the financial crisis, said in Hong Kong that he was “still bearish” and earnings will “surprise on the downside.”

BHP Billiton, the world’s largest mining company, lost 3.8 percent to 1,350 pence. Anglo American, the fourth-biggest, slid 5.7 percent to 1,300 pence. Nickel, copper and lead retreated on the London Metals Exchange.

Peter Hambro

Peter Hambro slumped 11 percent to 501 pence after saying it won’t pay a second-half dividend and reporting a 43 percent fall in annual profit as wage and financing costs rose.

Hammerson dropped 5.9 percent to 282 pence as JPMorgan downgraded the shares to “neutral” from “overweight.” Liberty International lost 4.6 percent to 443 pence after the brokerage cut its rating on the shares to “underweight” from “neutral.”

“We thought the sector looked oversold in March and now the rebound since then looks too far, too fast,” wrote London- based JPMorgan analyst Harm Meijer. “We believe the sector’s risk/return profile does not currently look attractive enough.”

Carphone Warehouse Group Plc declined 8.4 percent to 127.75 pence. The U.K. mobile-phone retailer will this week say it delayed plans to break up its retail and telecommunications units, the Sunday Telegraph reported, without saying where it got the information.

Metro International

Chief Executive Officer Charles Dunstone and Chief Financial Officer Roger Taylor will give more information on the restructuring plan when the company publishes its earnings, spokesman Shane Conway said in an interview yesterday. He declined to provide further details or comment on the Telegraph story.

Metro International SA, the Swedish company that publishes free newspapers in 22 countries, slumped 37 percent to 0.96 krona after saying it will proceed with a rights offer to raise cash as discussions with a potential buyer were terminated.

The index of U.S. leading indicators for March may show today the longest recession in the post-World War II era will start loosening its grip in coming months. The gauge of the outlook over the next three to six months dropped 0.2 percent following a 0.4 percent February decrease, according to the median estimate of 40 economists surveyed by Bloomberg News.

Officials in U.S. President Barack Obama’s administration have signaled there may be no need to request more financial- rescue funds from Congress as several banks plan to return taxpayer money and others are pushed to tap private markets first.

Stress Tests

White House chief of staff Rahm Emanuel said while he had not seen results of stress tests on the 19 biggest banks, he believed “we won’t” have to get more money. Aide Lawrence Summers said “the first resort for more capital is going to the private markets,” by issuing new equity or swapping some liabilities into stock that dilutes other stakeholders.

Nobel Prize-winning economist Michael Spence said in an interview with Bloomberg Television he would be “very surprised” if all 19 banks pass the exam, which he says will probably give a better picture of the companies’ health than earnings statements. He also said that “the data on lending and credit are still not that encouraging.”

Allied Irish Banks Plc led gains in the Stoxx 600, rallying 9.8 percent to 94.4 euro cents. Ireland’s biggest lender by market value said it may sell some assets to boost its capital by 1.5 billion euros ($1.95 billion).

Bank of China

Bank of China Ltd., the country’s second-largest lender, climbed 5 percent to HK$2.95. Ping An Insurance (Group) Co., the nation’s second-largest insurer, gained 3.3 percent to HK$52.70.

The government will continue its “proactive” fiscal policy while the People’s Bank of China will maintain its “moderately loose” monetary policy, Wen said on April 18. The country’s “rapid reaction in rolling out the stimulus package has resolved some prominent problems in the economy,” he said.

Kuehne & Nagel International AG rose for a sixth day, adding 4.9 percent to 83.8 Swiss francs. First-quarter profit at the largest sea-freight forwarder by tonnage beat analysts’ estimates.

To contact the reporter on this story: Adam Haigh in London at ahaigh1@bloomberg.net.

Last Updated: April 20, 2009 08:53 EDT