By Justin Carrigan and Paul Sillitoe Feb. 23 (Bloomberg) -- European stocks fell and the euro weakened after German business confidence unexpectedly declined for the first time in 11 months. Oil and copper dropped. The Dow Jones Stoxx 600 Index lost 0.6 percent at 12:01 p.m. in London, while futures on the Standard & Poor’s 500 Index retreated 0.3 percent. The euro fell against the yen and the dollar, reversing earlier gains, while the Swiss franc slipped on speculation of sales by the central bank. Crude oil dropped as much as 1.9 percent in New York trading. The Ifo institute’s business climate index dropped in January as the coldest winter in 14 years hurt retail sales and construction, adding to concern the global economic recovery is faltering. Fed Bank of San Francisco President Janet Yellen said yesterday the U.S. economy still needs “the support of extraordinarily low rates” as policy makers try to damp speculation that last week’s increase in the Fed’s discount rate signals a rise in borrowing costs. “Growth is recovering, but it’s not recovering too fast to have the major central banks tighten monetary policy,” Rajeev de Mello, the Singapore-based head of Asian investment at Western Asset Management Co., which oversees about $482 billion, said in an interview on Bloomberg Television. “We don’t think that the Fed’s going to tighten until very late this year, if at all. We don’t think the ECB is going to tighten.” Earnings Versus Economy The MSCI World Index of 23 developed nations’ stocks fell 0.2 percent as the German confidence report overshadowed earnings that beat analysts’ estimates. Wolseley Plc rose 12 percent in London after forecasting profit ahead of analysts’ estimates. Heineken NV, the world’s third-largest brewer, climbed 3 percent in Amsterdam and Carlsberg A/S surged 6.5 percent in Copenhagen after earnings topped forecasts. Commerzbank AG declined as much as 4 percent in Frankfurt after posting a wider-than-estimated loss. The retreat in U.S. futures indicated the S&P 500 may extend yesterday’s 0.1 percent drop. Home prices in the U.S. probably declined at the slowest pace since May 2007, the S&P/Case-Shiller index may show at 9 a.m. in New York. Consumer confidence probably slipped, a report at 10 a.m. may show. Home Depot Inc. raised its dividend for the first time since 2006 after reporting earnings that exceeded estimates. Of the more than 400 companies in the S&P 500 index that announced results since Jan. 11, about 76 percent have beaten forecasts for earnings on a per-share basis, according to Bloomberg data. Asian shares led emerging markets higher, with Thailand’s SET Index rising 1.2 percent and Indonesia’s Jakarta Composite Index up 0.8 percent. The MSCI Emerging Markets Index climbed 0.3 percent to a three-week high. Euro Drops The euro dropped against 10 of its 16 most-traded peers, while the dollar pared earlier losses to gain against 13 of the group. While U.S. the central bank increased its discount rate for direct loans to banks last week, Fed Chairman Ben S. Bernanke is likely to reassure U.S. lawmakers tomorrow that the target rate for federal funds will remain in the range of zero to 0.25 percent. The Swiss franc dropped as much as 0.4 percent versus the euro for the biggest decline since Feb. 5, snapping a four-day advance. The dollar lost 0.3 percent against the rand after South Africa said gross domestic product rose an annualized 3.2 percent in the fourth quarter, compared with 0.9 percent in the previous three months. German bonds advanced after the Ifo report, driving the yield on the 10-year security down by 3 basis points to 3.24 percent. Treasuries also gained, with the 10-year note yield down 2 basis points to 3.77 percent. Crude oil declined 0.9 percent to $80 a barrel in New York. White sugar fell 1.3 percent to $678.30 a ton in London, a two- month low, bringing its five-day drop to 8.2 percent. Buyers including Egypt scrapped or curbed purchases after prices last month reached the highest levels since at least 1989. Copper rose 0.3 percent in London, while aluminium, nickel and zinc advanced. To contact the reporter on this story: Justin Carrigan in London at jcarrigan@bloomberg.net

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