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BLBG: Stocks in Europe and Asia Advance; U.S. Index Futures Decline
 
By Adria Cimino

Nov. 14 (Bloomberg) -- Stocks gained in Europe and Asia as Credit Agricole SA and Vinci SA reassured investors on the outlook for earnings and commodity shares rose after trading near their cheapest on record. U.S. index futures fell.

Credit Agricole advanced 4.8 percent after the bank posted better-than-expected profit, while Vinci, the world's biggest builder, climbed 6.3 percent on higher sales. BP Plc, Europe's second-largest oil company, jumped 7.1 percent, and BHP Billiton Ltd., the world's biggest mining company, rallied 3.4 percent.

The MSCI World Index added 1.2 percent to 904.26 at 12:25 p.m. in London, trimming this week's decline to 3.7 percent. Energy and mining stocks led gains among the 10 industry groups in the gauge for 23 developed countries.

``There's a return to certain stocks that have suffered,'' said Nathalie Pelras, a fund manager at KBL Richelieu Gestion in Paris, which oversees $5.1 billion. ``Even with this significant rally, valuations are still far lower than they were'' last week.

Europe's Dow Jones Stoxx 600 Index advanced 2.2 percent, limiting losses this week to 4.9 percent. The MSCI Asia Pacific Index gained 1.2 percent.

The Stoxx 600 Basic Resources Index closed yesterday valued at 4 times earnings of the companies in the index, compared with 3.8 times profit on Oct. 27, the cheapest on record. The Oil & Gas Index traded at 5.3 times earnings, compared with 5.1 times profit last month.

Standard & Poor's 500 Index futures lost 1.4 percent before a report that may show sales at U.S. retailers fell in October by the most since the 2001 recession. Nordstrom Inc. and Kohl's Corp. cut their earnings forecasts as profit declined.

Emerging Markets

Hungary and the Czech Republic led gains in emerging markets. Budapest's BUX Index rallied 6.3 percent as OTP Bank Nyrt. and Foldhitel es Jelzalogbank Nyrt. jumped on higher profit even as the economy contracted. Prague's PX index climbed 5 percent, led by CEZ AS, the nation's biggest utility, after earnings topped estimates. The MSCI Emerging Markets Index rose 1.5 percent.

More than $30 trillion has been erased from the value of global equity markets this year as credit losses and writedowns totaled $959 billion in the worst financial crisis since the Great Depression.

Analysts have slashed earnings estimates as the credit- market turmoil spread, pushing economies into recession. Profit for companies in the Stoxx 600 will fall 8.4 percent this year, according to data Bloomberg compiled as of Nov. 7. That compares with an estimate for 11 percent growth at the start of the year.

Earnings Tally

Earnings at companies in the S&P 500 that have reported third-quarter results dropped 17 percent on average, according to Bloomberg data. Analysts expect an 8.5 percent decline in full-year profits, estimates compiled by Bloomberg show.

A report today showed Europe's economy fell into its first recession in 15 years in the third quarter, paving the way for deeper cuts to interest rates and taxes. Gross domestic product in the 15 euro nations shrank 0.2 percent in the third quarter from the previous three months, when it also contracted 0.2 percent. The figure matched economists' estimates in a Bloomberg survey.

A two-day summit on the global economic crisis begins today in Washington with world leaders likely to agree on little more than trying to spend their way out of a global recession. European leaders are demanding greater state controls over financial markets. President George W. Bush takes a narrower view.

Companies from Credit Agricole and Vinci to Vivendi SA European Aeronautic, Defence & Space Co. rallied as their results bolstered confidence in earnings outlooks.

Reassuring Investors

Credit Agricole rose 4.8 percent to 9.85 euros. France's third-largest bank by market value reported profit of 365 million euros ($463 million) in the third quarter. That's more than double the 153 million-euro median estimate of 13 analysts surveyed by Bloomberg.

Vinci climbed 6.3 percent to 29.40 euros. The builder said third-quarter sales rose 10 percent to 8.96 billion euros and maintained its full-year growth target after acquisitions in energy services to counter a slowdown in toll-road revenue. Analysts estimated sales of 8.65 billion euros in a Bloomberg survey.

Vivendi gained 3.7 percent to 20.73 euros. The owner of the world's largest music company repeated a forecast that net income excluding the effect of acquisitions will rise 8.3 percent this year.

EADS advanced 3.6 percent to 12.30 euros. The continent's largest aerospace company raised its 2008 earnings forecast after an increase in Airbus A380 deliveries and smaller charges helped restore profit in the third quarter.

BP, BHP

BP rose 7.1 percent to 504.5 pence. Royal Dutch Shell Plc, Europe's biggest oil company, gained 6.4 percent to 1,722 pence.

Crude oil climbed 3.7 percent yesterday to $58.24 a barrel on the New York Mercantile Exchange. It traded at $58.48 today.

BHP added 3.4 percent to 958 pence. Copper jumped by the exchange-imposed daily limit in Shanghai as a drop in the dollar may boost Chinese demand for raw materials. Copper, lead, nickel and tin advanced in London.

Continental AG surged 30 percent to 38.17 euros. Schaeffler Group, which is acquiring Europe's second-largest auto-parts maker, said it will complete the filing of the deal with European Union antitrust authorities today, reassuring investors that the transaction will go ahead as planned.

EFG International jumped 15 percent to 19.15 francs. The Swiss private bank whose largest shareholder is the Latsis family said profit for the first 10 months of the year is higher than in the same period last year after ``strong'' inflows since July.

To contact the reporter on this story: Adria Cimino in Paris at acimino1@bloomberg.net.

Source