By Elizabeth Stanton Corp. downgraded chipmakers and concern grew that the rally has outpaced the prospects for economic growth. The yen and the dollar strengthened against high-yielding currencies, commodities declined and Treasuries rose. The MSCI World Index of equities in 23 developed countries dropped 1.4 percent at 9:39 a.m. in New York. The Standard & Poor’s 500 Index fell 1.2 percent to 1,096.39 as Intel Corp. and Texas Instruments Inc. lost more than 4.5 percent. The yen climbed against all 16 of its most-traded counterparts and the Dollar Index advanced as much as 0.5 percent. Aluminum and copper led a retreat in industrial metals. Stocks slid amid speculation the eight-month, 68 percent rally that drove the valuation of the MSCI World Index to the most expensive level in seven years already reflects forecasts for a 25 percent rebound in corporate earnings next year. The Organization for Economic Cooperation and Development doubled its growth forecast for the leading developed economies next year to 1.9 percent in a report today, while saying that mounting debt burdens will keep the expansion in check. “Markets have gone up quite aggressively in the last six months or so and now the time has come for a consolidation,” said Marino Valensise, chief investment officer at Baring Asset Management Ltd. in London, who helps oversee about $45 billion. “In stock markets around the world, volumes have gone down and that may be a sign that a short-term top is very close.” Retreat From Year’s High The S&P 500 Index retreated from a 13-month high for a second day even as the Labor Department said the number of Americans filing claims for unemployment benefits held at a 10- month low. Europe’s Dow Jones Stoxx 600 Index fell 1.2 percent, the third day of declines, after Groupe Danone SA, the world’s largest yogurt maker, cut its forecast for annual sales growth, citing “profound” changes in consumer spending. Danone lost 3.7 percent in Paris. Asian stocks declined, dragging the MSCI Asia Pacific Index down for a third day, as share-sale plans at Japanese companies raised concern the value of existing holdings will be reduced. Mitsubishi UFJ Financial Group Inc. sank 3.7 percent and Nomura Real Estate Residential Fund Inc. slumped 8.6 percent after filing to sell stock. Sixty-five percent of companies in the MSCI World Index that reported earnings since Oct. 7 have beaten analysts’ estimates, Bloomberg data show. The measure has risen 69 percent since March 9 on signs government stimulus policies and record- low interest rates are helping to pull the global economy out of the recession. Emerging Markets The MSCI Emerging Markets Index dropped the most in a week, retreating 1.1 percent. Hungary’s Budapest Stock Exchange Index fell 2.3 percent and Russia’s Micex Index slumped 1.5 percent while the ruble weakened 0.5 percent against the dollar. Emerging markets analysts cut “buy” ratings on Brazil to 44.6 percent this month, the lowest since Bloomberg began tracking them in 1997, after a 139 percent surge in the benchmark Bovespa Index pushed equities to their priciest levels in six years. The yen appreciated 1.1 percent against the euro and 0.6 percent against the dollar. The dollar advanced 0.5 percent to $1.4885 versus the euro. “The yen and U.S. dollar have been supported by the continued upturn in risk-averse conditions,” Lee Hardman, a currency strategist at Bank of Tokyo-Mitsubishi UFJ Ltd. in London, wrote in a report. “Current conditions remain unfavorable for risk assets, leaving them vulnerable to a correction lower.” Growth Forecast The combined economy of the OECD’s 30 member countries will expand 1.9 percent next year and 2.5 percent in 2011, the Paris- based organization said. Output will contract 3.5 percent this year. The 2010 forecast compares with the 0.7 percent growth predicted by the OECD in June, when the major economies were just beginning to emerge from their worst recession in more than half a century. The index of U.S. leading indicators probably rose for a seventh consecutive month in October, signaling the economy will keep growing into next year, economists said before a report today. Another report may show manufacturing accelerated in the Philadelphia region this month. Copper for delivery in three months dropped 0.2 percent to $6,865 a metric ton on the London Metal Exchange, falling from a 14-month high. Aluminum, nickel and zinc also fell. Crude oil fell 0.4 percent to $79.24 a barrel in New York. Treasuries Rise Treasuries rose, with the yield on the 10-year note falling 2 basis points to 3.34 percent, before the U.S. government announces sales of two-, five- and seven-year notes today. The Treasury will sell $44 billion of two-year securities on Nov. 23, $42 billion of five-year debt on Nov. 24 and $32 billion of seven-year securities on Nov. 25, according to Wrightson ICAP LLC, a Jersey City, New Jersey-based research firm that specializes in government finance. President Barack Obama said in an interview with Fox News recorded in Beijing that the U.S. must get the federal deficit under control. If the government continues to pile up debt, “people could lose confidence in the U.S. economy in a way that could actually lead to a double-dip recession,” he said. Sales of coupon-bearing Treasuries will increase to $2.38 trillion in the fiscal year that began Oct. 1, from $1.81 trillion in the prior 12 months, primary dealer Goldman Sachs Group Inc. said in a report on Oct. 20. To contact the reporter on this story: Elizabeth Stanton in New York at estanton@bloomberg.net.

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