April 14 (Bloomberg) -- Stocks dropped in Europe and Asia after Royal Philips Electronics NV's profit missed estimates, Goldman Sachs Group Inc. called U.S. earnings "awful" and the Group of Seven finance ministers said economic prospects have deteriorated. U.S. index futures retreated.
Philips, Europe's largest consumer-electronics maker, declined after saying earnings slumped 75 percent in the first quarter. KDDI Corp. sank in Tokyo as full-year profit missed its target. Wachovia Corp. slipped in Germany after bringing forward its earnings announcement. British Airways Plc led airlines lower as Morgan Stanley recommended selling the shares, while ABB Ltd. decreased in Zurich after Lehman Brothers Holdings Inc. downgraded the world's biggest builder of power networks.
The MSCI World Index lost 0.6 percent to 1,452.02 at 9:25 a.m. in London as all 10 industry groups decreased. Futures on the Standard & Poor's 500 Index fell 0.1 percent. China's CSI 300 Index dropped 6.5 percent, the most since Jan. 28 and the biggest slide among indexes tracked by Bloomberg worldwide.
"People are highly jittery," said Julian Chillingworth, London-based chief investment officer at Rathbone Brothers Plc, which has $21 billion. "We are likely to see more poor news in terms of earnings." Chillingworth spoke in a Bloomberg Television interview.
G-7 finance ministers said prospects for the global economy have weakened and financial market losses will continue. The ministers downgraded their outlook from two months ago, saying the economy faces "downside" risks, according to a statement on April 11.
Cutting Estimates
Concern $245 billion in writedowns and credit losses will slow growth has led analysts to cut profit estimates. Earnings for European companies will shrink in 2008 for the first time in six years as the credit-market crisis drags down the global economy, according to analyst estimates. Profit at companies in the S&P 500 are expected to fall 12.3 percent in the first quarter, according to data compiled by Bloomberg.
Europe's Dow Jones Stoxx 600 Index declined 0.7 percent today, while the MSCI Asia Pacific Index decreased 2.3 percent, set for its biggest drop since March 17.
U.S. stocks sank the most in three weeks on April 11 after General Electric Co. said the debt-market turmoil led to an unexpected earnings decline.
First-quarter U.S. earnings have had an "awful" start and are a "harbinger of things to come," a team led by New York- based David Kostin, Goldman's U.S. investment strategist, wrote today.
Philips, KDDI
Philips dropped 2.9 percent to 23.22 euros after the company reported net income fell to 219 million euros ($344.2 million) in the first quarter from 875 million euros a year earlier. Analysts had predicted a profit of 276 million euros, according to a Bloomberg survey.
"For Philips to come out with this, it doesn't really boost confidence," said Matthew Buckland, a trader at CMC Markets in London. "It's not a particularly good outlook with the G-7's concern about global growth."
KDDI, Japan's second-biggest mobile-phone operator, fell 7.8 percent to 641,000 yen, the largest loss since Feb. 22, after it reported full-year profit that missed its target by 1.8 percent because of costs to add customers.
Canon Inc., the world's biggest maker of digital cameras, lost 5 percent to 4,610 yen, its lowest close since March 31. Profit may fall as much as 35 billion yen ($350 million) during the three months ended March 31 because of the yen's gain, the Nikkei newspaper reported, without saying where it got the information.
Wachovia
Wachovia, the fourth-largest U.S. bank, dropped 15 cents to $27.66 in Germany.
First-quarter results will be announced today instead of April 18, the Charlotte, North Carolina-based bank said in a statement late yesterday. Wachovia may receive as much as $7 billion from investors to shore up capital, the Wall Street Journal reported earlier.
British Airways fell 2.9 percent to 217 pence as Morgan Stanley cut its recommendation on the shares to "underweight" from "equal-weight." Earnings may be hurt from cost pressure from the new Terminal 5 at London's Heathrow Airport and an "aggressive" pilots' union, according to London-based analyst Penelope Butcher in a note to clients today.
Air Berlin Plc slid 6.2 percent to 6.72 euros. Europe's third-biggest discount carrier was also downgraded to "underweight" from "equal-weight" at Morgan Stanley.
ABB, Swiss Re
ABB retreated 2.6 percent to 26.18 Swiss francs. Lehman Brothers cut its recommendation on the stock to "equal-weight" from "overweight."
Swiss Reinsurance Co., the world's largest reinsurer, declined 2.3 percent to 85.95 francs after UBS AG cut its recommendation on the stock to "sell" from "neutral."
"Swiss Re has been the best performer in the sector year to date," analyst Ben Cohen wrote in a research note dated today. "We see material pressure in the core operations."
Belgacom SA fell 2.1 percent to 29.96 euros. Belgium's biggest phone company said its forecast for earnings at the wireless unit Proximus are "no longer valid" after an appeals court suspended the Belgian regulator's decision to cut mobile connection rates.
Enodis Plc climbed 5 percent to 242.5 pence after Manitowoc Co., the biggest ice-machine maker in the U.S., agreed to buy it for 948 million pounds ($1.87 billion) to become the world's largest supplier of catering equipment.
Blockbuster Inc., the world's largest movie-rental chain, made an unsolicited bid for Circuit City Stores Inc., the second- largest U.S. electronics retailer, worth at least $1 billion. The stocks didn't trade in Europe.
Punch Taverns Plc gained 1.9 percent to 599 pence after Mitchells & Butlers Plc said it approached the larger pub owner and former suitor about buying outlets managed by the company. Mitchells shares rose 0.6 percent to 334 pence.
To contact the reporter on this story: Adam Haigh in London at ahaigh1@bloomberg.net
Last Updated: April 14, 2008 04:34 EDT
