European Stock Futures Drop Amid Concern About Crisis Response
European stock-index futures declined amid growing concern that policy makers are divided over how to handle the region’s debt crisis. Asian shares and U.S. futures advanced.
Infineon Technologies AG (IFX) and STMicroelectronics NV (STM) may move after Advanced Micro Devices Inc. cut its forecasts for third- quarter sales and profitability. Tesco Plc (TSCO) may fall as Citigroup advised selling shares of the U.K.’s largest supermarket chain.
Futures on the Euro Stoxx 50 Index expiring in December lost 0.7 percent to 2,151 as of 7:17 a.m. in London, while FTSE 100 Index futures also declined 0.7 percent. Contracts on the Standard & Poor’s 500 Index climbed 0.7 percent and the MSCI Asia Pacific Index gained 0.3 percent.
“The European patient is ill and has already had several different medicines prescribed,” said William De Vijlder, who oversees $778 billion as the global chief investment officer of Paris-based BNP Paribas (BNP) Investment Partners. “But, to the patient’s frustration, the doctors don’t seem to be able to agree on which medicine is the right one and what dose to prescribe. Fears of a recession are very much alive.”
The Stoxx Europe 600 Index is heading for its worst quarter since 2008, having fallen 17 percent amid concern global economic growth is slowing and policy makers are struggling to contain the European debt crisis. The gauge has lost 0.4 percent this month following an 11 percent slump in August.
Global investors anticipate Europe’s debt crisis leading to an economic slump, a financial meltdown and social unrest in the next year, with 72 percent predicting a country abandoning the euro as a currency within five years, a Bloomberg survey found.
About three-quarters of those questioned this week said the euro-area economy will fall into recession during the next 12 months and 53 percent said turmoil will worsen in a banking sector laden with government bonds, according to the quarterly Global Poll of 1,031 investors, analysts and traders who are Bloomberg subscribers. Forty percent see the 17-nation currency bloc losing at least one member in the next year.
Europe’s woes have reignited as Greece attempts to stave off default and spars with its European Union partners over whether it deserves the next tranche of aid next month. Euro- area lawmakers are also taking their time implementing a July overhaul of their rescue fund to give it more crisis-fighting tools, while investors question the ability of banks to withstand further market unrest as signs also mount that the economy is losing momentum.
German Chancellor Angela Merkel will need to gather enough support today among her coalition for a vote on the region’s bailout fund, known as the European Financial Stability Facility. The vote in Berlin on changes to the EFSF would allow the fund to buy bonds of distressed states and offer emergency loans to governments. The main opposition Social Democrats and Greens have said they will vote with Merkel’s government.
Italian and Spanish financial market regulators extended bans on short selling of financial shares that were introduced last month in a bid to stem market volatility. The Spanish ban will remain “until the market conditions allow it” to be lifted, the country’s financial regulator said late yesterday. Italy’s restriction, and another enacted by France in August, will both last until Nov. 11.
Infineon and STMicroelectronics, Europe’s largest chipmakers, may move. AMD, the world’s second-biggest maker of processors for personal computers, said sales in the period ending Oct. 1 will increase 4 percent to 6 percent from the previous quarter. That compares with an earlier prediction for growth of about 10 percent.
Citigroup recommended selling Tesco shares ahead of its earnings report due Oct. 5, according to a report today.
ING Groep NV (INGA) may be active as the Financial Times reported that the Dutch lender may sell its stake in SulAmerica in a deal that may be valued at $1 billion. ING spokesman Raymond Vermeulen declined to provide further details in an interview today.
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