Oct. 22 (Bloomberg) -- European stock-index futures dropped and Asian shares fell as investors speculated that China may need to raise interest rates to curb inflation and Ericsson AB reported net income that missed analysts’ estimates. China Unicom Ltd., the nation’s second-biggest mobile-phone operator, sank 2.7 percent in Hong Kong as the Chinese statistics bureau said inflationary expectations are rising. Ericsson may fall after the world’s biggest maker of mobile- phone networks posted a drop in profit. Credit Suisse Group AG may be active after third-quarter earnings topped estimates. Futures on the Dow Jones Euro Stoxx 50 Index slid 1.4 percent as of 7:23 a.m. in London. The U.K.’s FTSE 100 Index is set to open 61 points lower, according to inter-dealer broker BGC Partners. The MSCI Asia Pacific Index slumped 1.1 percent. Europe’s Dow Jones Stoxx 600 Index has jumped 58 percent since March 9 as the French and German economies unexpectedly exited recessions, pushing valuations in the index to more than 52 times reported earnings, the most expensive level since 2003, Bloomberg data show. “There’s no escaping the simple fact that stocks have been starting to look increasingly overbought for some time now,” said Ben Potter, a research analyst at IG Markets in Melbourne. Futures on the Standard & Poor’s 500 Index slipped 0.1 percent. U.S. stocks tumbled in the final hour of trading yesterday after analyst Dick Bove downgraded Wells Fargo & Co., erasing a rally spurred by better-than-estimated results at Morgan Stanley and Yahoo! Inc. The S&P 500 is trading at its highest valuation in five years after climbing 60 percent from a 12-year low in March as the government lent, spent or guaranteed $11.6 trillion to combat the worst recession since the 1930s. China, Inflation China’s economy grew 8.9 percent in the third quarter, the fastest pace in a year, as stimulus spending and record lending growth helped the nation lead the world out of a recession. Separate reports showed industrial production and retail sales accelerated in September. Inflationary expectations are increasing in China as prices rise month-on-month, statistics bureau spokesman Li Xiaochao said at a press briefing in Beijing today. Ericsson may retreat after the company’s third-quarter net income fell 71 percent to 810 million kronor ($118 million) as clients slashed spending. Analysts had estimated profit of 1.97 billion kronor in a Bloomberg survey. Credit Suisse, Switzerland’s biggest bank by market value, will probably move after reporting a third straight quarterly profit on gains from trading. Net income was 2.35 billion Swiss francs ($2.33 billion), compared with a loss of 1.26 billion francs in the year-earlier period. That surpassed the 1.74 billion-franc median estimate of 14 analysts surveyed by Bloomberg. Nestle, Lloyds Nestle SA may be active as the world’s largest food company said organic sales growth was 3.6 percent in the first nine months. The company increased its share buyback to 7 billion francs from 4 billion, citing “solid operational performance.” Lloyds Banking Group Plc may move after the Financial Times reported that the lender wants to start a rights offering and refinancing next week, provided it persuades the government and regulators to agree to the deal over the weekend. The newspaper cited people familiar with the matter. The bank has drawn up measures that could generate more than the 25 billion pounds ($42 billion) of capital “uplift” required to exit the U.K.’s toxic-asset protection plan, the FT said. Calls by Bloomberg to the mobile telephones of Lloyds spokesmen Shane O’Riordain and Ross Keany were not immediately returned. To contact the reporter on this story: Adam Haigh in London at ahaigh1@bloomberg.net

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