European stocks and U.S. futures retreated, with the benchmark Stoxx Europe 600 Index heading for its biggest weekly loss since November 2008, as concern escalated the economic recovery is stalling. Asian shares sank.
Royal Bank of Scotland Group Plc (RBS) plunged 8 percent after reporting a first-half net loss that was wider than analysts had estimated. Allianz SE (ALV), Europe’s biggest insurer, lost 3.8 percent after reporting second-quarter net income that missed analysts’ estimates. Dexia SA (DEXB) dropped 3.4 percent after Belgium’s largest bank by assets posted the biggest quarterly loss in its history.
The Stoxx 600 retreated 1.8 percent to 238.78 at 10:27 a.m. in London, headed for a weekly drop of 9.9 percent. The benchmark measure has declined 18 percent from this year’s high on Feb. 17 amid speculation that Europe will fail to contain its sovereign-debt crisis and that the economic recovery is faltering in the U.S. Standard & Poor’s 500 Index futures lost 0.2 percent and the MSCI Asia Pacific Index slumped 3.7 percent.
“The markets want to see a solution that is sustainable in Europe,” said Markus Steinbeis, head of equity portfolio management at the Unterfoehring, Germany-based unit of Pioneer Investments KGmbH, which oversees about $221 billion globally. “The European Monetary Union is facing the risk of collapsing. The market is afraid of a recession. There’s a point where sentiment is collapsing and maybe this point is right now.”
As of 9:57 a.m. in London, 77 percent of the daily volume this year in Euro Stoxx 50 futures had traded, according to data compiled by Bloomberg.
Italian and Belgian bonds dropped today, while Spanish bonds climbed.
Global Stocks Slump
Global stocks retreated for the eighth day, with the MSCI All-Country World Index of stocks in developed and emerging markets sliding 1.5 percent to 307.04 today. The measure of global equities has declined 14 percent from its May 2 high. In Switzerland, the benchmark Swiss Market Index (SMI) extended its losses after yesterday entering a bear market. The gauge has slumped 23 percent from this year’s high.
The benchmark gauge for U.S. stock options jumped the most in more than four years yesterday. The VIX, as the Chicago Board Options Exchange Volatility Index is known, surged 35 percent to 31.66.
The VStoxx, a measure of volatility in European stocks, climbed for an eighth, heading for a weekly gain of 37 percent, its largest rally since May 2010.
U.S. Payrolls, Unemployment
A report today may show that U.S. payrolls climbed by 85,000 workers in July, following an 18,000 increase in June that was the smallest this year, according to the median forecast of 88 economists surveyed by Bloomberg News. The jobless rate held at 9.2 percent in July after rising in each of the previous three months, according to a survey of economists. The Labor Department’s data are due at 8:30 a.m. in Washington.
RBS tumbled 8 percent to 27.9 pence after reporting a first-half net loss of 1.4 billion pounds ($2.3 billion). That was wider than the 571 million-pound loss estimated by five analysts surveyed by Bloomberg. The Edinburgh-based lender wrote down the value of its Greek debt holdings by 733 million pounds, it said in a statement today.
Allianz declined 3.8 percent to 79.66 euros. The Munich- based insurer said second-quarter net income declined to 1 billion euros ($1.4 billion). That fell short of the 1.28 billion-euro average estimate of 10 analysts surveyed by Bloomberg. Allianz wrote down its Greek debt holdings by 326 million euros at the end of June.
Dexia, Rio Tinto
Dexia slipped 3.4 percent to 1.60 euros after saying its net loss of 4.03 billion euros in the second quarter eroded Dexia’s own funds to 3.56 euros a share. That fell short of the 3.88-euro estimate of Dirk Peeters, an analyst at KBC Securities NV in Brussels. The loss also included a 377 million-euro pretax writedown on Greek bond holdings.
Rio Tinto Group, the world’s second-biggest mining company, and Anglo American Plc (AAL), part owner of the world’s biggest platinum and diamond producers, lost 1.5 percent to 3,740 pence and 1.9 percent to 2,559.9 pence, respectively. Basic-resource shares were amongst the worst performers in the Stoxx 600 as aluminum, copper, lead, nickel, tin and zinc retreated on the London Metal Exchange.
Telecom Italia SpA (TIT) jumped 3.8 percent to 83.3 euro cents after saying second-quarter earnings before interest, taxes, depreciation and amortization rose 4.9 percent to 3.05 billion euros, according to slides from a presentation. Analysts had estimated Ebitda of 3 billion euros.
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