European stocks and U.S. index futures fell, reversing earlier gains, and commodities dropped as a pledge by Group of 20 nations to tackle rising risks failed to ease concern the global economy is on the brink of another recession. Ten-year Treasury notes erased declines.
The Stoxx Europe 600 Index slipped 1.9 percent at 8:20 a.m. in New York as benchmark gauges in France, Germany and the U.K. dropped at least 1.5 percent. Standard & Poor’s 500 Index futures fell 1.3 percent, signaling the index is headed for its worst week since 2008. The MSCI Asia Pacific excluding Japan Index lost 1.8 percent. Copper slid 3.8 percent, and oil dropped below $79 a barrel. The yield on the 10-year Treasury fell two basis points to 1.70 percent.
The Dow plunged 500 points on the grim global economic outlook.
More than $3.4 trillion has been erased from equity values this week, driving global stocks into a bear market and the lowest valuations since March 2009. G-20 officials said after talks in Washington they were “committed to a strong and coordinated international response to address the renewed challenges facing the global economy.” TheEuropean Central Bank may act to tackle risks to growth as soon as next month should economic data disappoint, Governing Council member Luc Coene said.
“I would still stay on the sidelines,” Mikio Kumada, a global strategist at LGT Capital Management in Singapore, which has about $24 billion, said in a Bloomberg Television interview with Linzie Janis. “The risk of a recession has increased further. I’m afraid for any short-term relief in the equity markets. The safest place for the moment is to be in cash.”
Greek Banks
All 19 industry groups in the Stoxx 600 declined. The National Bank of Greece SA, EFG Eurobank Ergasias SA, Alpha Bank SA and Piraeus Bank SA, the four-biggest Greek lenders, dropped more than 7 percent after Moody’s Investors Service cut their credit ratings on concern over holdings of the nation’s government bonds.
The cost of insuring against default on European financial debt rose to records, reversing declines. The Markit iTraxx Financial Index of credit-default swaps on the senior debt of 25 banks and insurers jumped 16 basis points to an all-time high of 318, according to JPMorgan Chase & Co. at 12:30 p.m. in London.
The yield on the German two-year note yield dropped five basis points to 0.35 percent and benchmark 10-year bund yields slumped two basis points to 1.65 percent.
Hewlett-Packard
The decline in U.S. index futures indicated the S&P 500 may extend a four-day, 7.1 percent slide. Hewlett-Packard Co. decreased 2 percent in pre-market trading after replacing Chief Executive Officer Leo Apotheker with Meg Whitman.
The MSCI All-Country World Index, which has fallen 23 percent from its May peak, is valued at 11.4 times reported earnings.
The MSCI Emerging Markets Index dropped 3 percent, extending this week’s slide to 13 percent, the most since November 2008. South Korea’s Kospi Index tumbled 5.7 percent for the biggest retreat among global equity gauges, while Russia’s Micex Index fell 6.7 percent.
Oil in New York slid 2.6 percent to $78.43 a barrel after falling 6.3 percent yesterday. Tin slumped as much as 14 percent and nickel dropped as much as 11 percent, extending declines after the London Metal Exchange index of six industrial metals yesterday fell 6.4 percent, the most since Aug. 31, 2010.
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