Global Stocks, U.S. Futures Drop;

Volkswagen, Wal-Mart Fall Stocks declined in Europe and Asia, led by exporters and banks, after crude oil approached $100 a barrel and the U.S. Federal Reserve lowered its growth outlook for the world's biggest economy. U.S. index futures retreated.

Volkswagen AG and Royal Philips Electronics NV led a slump by European companies most dependent on U.S. sales. Honda Motor Co. and Toyota Motor Corp. dropped as the yen strengthened to a two-year high against the dollar. Credit Suisse Group and Societe Generale SA fell after Goldman, Sachs & Co. added the stocks to its ``conviction sell'' list. Wal-Mart Stores Inc., the world's largest retailer, retreated in Germany as oil surged to a record.
The MSCI World Index lost 0.7 percent to 1,560.51 as of 9:20 a.m. in London. Futures on the Standard & Poor's 500 Index slipped 0.9 percent to 1,432.8. Bonds rallied as investors sought the relative safety of government debt.
``The whole market is going to take a hit for fear the U.S. slowdown may spill over,'' said Luca Martina, who helps manage the equivalent of about $4.45 billion for private clients at Credit Suisse Private Banking in Turin, Italy. ``High oil prices certainly don't help.''
The slump in stocks and the Fed's lowered growth forecast for 2008 sparked demand for U.S. and European government bonds. Yields on 10-year U.S. Treasuries dropped below 4 percent for the first time since 2005, while two-year yields on European bonds slipped to their lowest in 11 months.
Concern that widening credit-market losses and record fuel costs will crimp economic growth in the U.S. pushed the yen beyond 109 to the dollar for the first time in more than two years. The U.S. currency also slid to the weakest against the euro since the single European currency's debut in 1999.
Oil rose above $99 a barrel for the first time as the slumping dollar increased demand for commodities.
European Investors
The MSCI World has retreated 4.5 percent this quarter in dollar terms, lashed by writedowns at the world's largest financial firms tied to the U.S. subprime mortgage slump. European-based investors have fared worse, with the index tumbling 8.1 percent when measured in euros.
For European investors, the S&P 500 is down 9.4 percent so far this year, while Japan's Nikkei 225 Stock Average has slid 15 percent. In local currency terms, the S&P 500 has gained 1.5 percent, and the Nikkei has lost 12 percent.
Europe's Dow Jones Stoxx 600 Index lost 1.4 percent to 353.49 today. Germany's DAX fell 1.2 percent, as did the U.K.'s FTSE 100. France's CAC 40 declined 1.4 percent.
The MSCI Asia Pacific Index dropped 2.2 percent to 154.57. Japan's Nikkei slid 2.5 percent, and South Korea's Kospi index lost 3.5 percent.
`Worse Day by Day'
``The picture is getting worse day by day,'' said Alberto Magnani, who manages the equivalent of about $300 million at Abbacus Sim SpA in Genoa, Italy. Losses related to the credit market turmoil are ``spreading to the overall economy.''
Volkswagen, Europe's largest automaker, dropped 1.7 percent to 161.88 euros. Consumer electronics producer Philips lost 3.3 percent to 26.52 euros. North America accounted for 14 percent of the carmaker's sales last year, while Philips got 28 percent of its revenue from the U.S.
Honda, Japan's second-largest carmaker, dropped 5.7 percent to 3,620 yen. Toyota Motor, the world's most-valuable carmaker, fell 2.8 percent to 5,940 yen.
Wal-Mart lost 39 cents to $45.11 in Germany. Crude oil for January delivery climbed as much as $1.26, or 1.3 percent, to a record $99.29 a barrel in after-hours electronic trading on the New York Mercantile Exchange.
Credit Suisse, SocGen
Credit Suisse slid 3.4 percent to 62.2 Swiss francs. Goldman Sachs added the bank to its ``conviction sell'' list because of the company's reliance on trading and capital markets to generate earnings.
``We continue to prefer banks with exposure to structural growth in emerging markets over banks with exposure to a potential cyclical recovery,'' London-based Goldman analysts wrote in a note to clients.
Societe Generale slid 3.8 percent to 96.74 euros. Goldman also cut Societe Generale to ``sell'' from ``neutral,'' and added the stock to its ``conviction sell'' list.
Paris-based Societe Generale may need to write down holdings of collateralized debt obligations as losses from the U.S. subprime mortgage market get worse, analysts wrote. The bank's shares are expensive compared with those of French peers, they added. ADRs of Societe Generale sank 3 percent from the stock's Paris close.
Lloyds TSB Group Plc, the U.K.'s No. 1 provider of personal loans, declined 2.8 percent to 458.75 pence. Goldman also added the shares to its ``conviction sell'' list.
LSE, Ericsson
London Stock Exchange Group Plc, Europe's largest stock market by the value of companies listed, dropped 7.3 percent to 1,749 pence after Banca Monte dei Paschi di Siena SpA, Italy's third-largest bank, sold its 2.9 percent stake in the exchange.
Ericsson AB, the world's largest maker of wireless phone networks, retreated 4.8 percent to 15.24 kronor. Goldman Sachs downgraded the shares to ``neutral,'' removing them from its ``conviction buy'' list.
Analysts including Tim Boddy in London cited a ``deteriorating fourth-quarter revenue outlook and the growing probability that the wireless infrastructure market will decline again in 2008,'' according to a note sent to clients today.
(Source bloomberg.com)