Oct. 1 (Bloomberg) -- U.S. stock-index futures and European shares declined as the highest valuations in five years offset a forecast for increased global economic growth from the International Monetary Fund. The euro dropped. Futures on the Standard & Poor’s 500 Index slid 0.5 percent at 11:37 a.m. in London, indicating the benchmark gauge for U.S. equities may drop for a third day. Europe’s Dow Jones Stoxx 600 Index slipped 0.3 percent after yesterday’s close marked its biggest quarterly rally since 1999. The euro fell against 13 of the 16 most-traded currencies on speculation finance ministers and central bankers will discuss the currency’s strength at this week’s Group of Seven meeting. The S&P 500 has rallied 56 percent since March 9 on signs the U.S. is rebounding from its deepest contraction since the Great Depression, pushing price-earnings valuations to the most expensive level since 2004 last week. The Washington-based IMF said today that the global economy will expand 3.1 percent next year, better than its July forecast for 2.5 percent, with Asia leading the world out of recession. “Our concern is that at the moment the earnings forecasts for 2010 are perhaps looking a little bit optimistic,” Stephen Davies, chief executive officer of Singapore-based Javelin Wealth Management Ltd., said in a Bloomberg Television interview. Declines in index futures were limited before reports on U.S. manufacturing and consumer spending that may add to evidence the recession is easing. Manufacturing Growth Manufacturing may have expanded last month at the fastest pace in more than three years, while consumer spending in August probably grew the most since 2003. The Institute for Supply Management’s factory gauge rose to 54 in September from 52.9, according to a Bloomberg News survey of economists. Separate data may show purchases rose 1.1 percent in August. The purchasing managers’ factory report is due at 10 a.m. New York time. The Commerce Department report at 8:30 a.m. may show the August gain in consumer spending was accompanied by a 0.1 percent increase in personal incomes, according to a survey. Europe’s Stoxx 600 fell after an 18 percent third-quarter surge, the biggest rally since the final three months of 1999. Equities have risen in the past two quarters as the Group of 20 nations committed $12 trillion to revive global growth and countries from Germany and France to Hong Kong and New Zealand exited recessions. Tandberg, Munich Re The Stoxx 600 earlier climbed as much as 0.7 percent, led by Tandberg ASA after Cisco Systems Inc. agreed to buy the world’s biggest videoconferencing-equipment maker for about $3 billion. Munich Re climbed as the world’s biggest reinsurer announced the resumption of its share-buyback program. Tandberg rallied 11 percent in Oslo. Cisco, the world’s largest maker of networking equipment, agreed to buy the Norwegian company for 17.2 billion kroner ($2.96 billion) to expand its video-conferencing products. Cisco will pay 153.50 kroner a share in cash, 11 percent more than Tandberg’s closing price yesterday. Cisco slipped 0.9 percent in German trading. Munich Re advanced 3.2 percent in Frankfurt. The reinsurer said it will repurchase shares with a volume of as much as 1 billion euros ($1.5 billion) by the time the company holds its 2010 annual general meeting. The MSCI Asia Pacific Index fell 1.1 percent as the Bank of Japan’s Tankan survey showed companies plan to deepen investment cuts. Markets in China and Hong Kong were closed for a holiday. The European currency dropped on prospects the euro region’s finance ministers and central bankers meeting today in Goteborg, Sweden will signal that further dollar weakness is unwelcome. The yen fell against the dollar as expansion in Chinese manufacturing sparked demand for higher-yielding assets in emerging markets. Euro Concern “The recent appreciation of the euro is beginning to bother policy makers in the euro zone, where deflationary pressure is strong,” said Takeshi Makita, a Tokyo-based economist at Japan Research Institute Ltd., a unit of Japan’s third-largest banking group Sumitomo Mitsui Financial Group Inc. The euro declined 0.5 percent against dollar and 0.2 percent versus the yen. The Japanese currency weakened 0.3 percent compared with the dollar. European Union Monetary Affairs Commissioner Joaquin Almunia said officials will discuss the currency’s advance in preparation for the Group of Seven meetings, Reuters reported. G-7 finance chiefs are meeting in Istanbul this weekend. The Romanian leu slumped as much as 1.1 percent against the euro, its biggest drop since April 23. The Social Democrats, the junior member of the nation’s ruling coalition, resigned from government following the dismissal of a Cabinet minister, threatening political stability in the European Union’s second- poorest state. To contact the reporters on this story: Daniel Hauck in London at dhauck1@bloomberg.net.

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