European and U.S. stock-index futures and Asian shares dropped after Moody’s Investors Service put Spain’s debt rating on review for a possible downgrade and as confidence among Japan’s largest manufacturers worsened. Banco Santander SA, Spain’s largest bank, and Banco Bilbao Vizcaya Argentaria SA may retreat in Madrid trading. Inditex SA might be active after the world’s largest clothing retailer reported earnings. Siemens AG may move on plans to sell its computer-services unit to Atos Origin SA in an 850 million-euro ($1.14 billion) transaction. Futures on the Euro Stoxx 50 Index lost 0.5 percent to 2,846 at 7:11 a.m. in London. FTSE 100 Index futures slid 0.3 percent, as did futures on the Standard & Poor’s 500 Index. The MSCI Asia Pacific Index dropped 0.8 percent. “We’ve just had a huge boulder thrown into the water sending waves of uncertainty through the market,” said London- based David Buik, a market strategist at BGC Partners. “Spain is an enormous country, its economy is the size of Greece, Ireland and Portugal times two. We will have a bit of a mark down today, but markets will regain their pose again in a day or two.” U.S. futures fell and the euro extended declines against the dollar and yen after Moody’s placed Spain’s Aa1 local and foreign currency government bond ratings on review and said the country will need to raise about 170 billion euros in 2011. Asian Stocks Fall Separately, Asian stocks dropped from a 2 1/2-year high after the Bank of Japan’s quarterly Tankan index of sentiment at large manufacturers fell to 5 in December from 8 in September. A positive number means optimists outnumber pessimists. Sentiment is expected to fall to minus 2 in March, the data also showed. The benchmark Stoxx Europe 600 Index rose for a seventh day yesterday, the longest stretch of gains in almost six months, boosted by better-than-forecast U.S. retail sales. U.S. stocks also advanced after the retail report helped equities withstand a surge in Treasury yields. Yields on 10-year Treasuries climbed to the highest level since May after the Federal Reserve said the U.S. recovery is continuing and maintained a $600 billion program of debt purchases. A U.S. government report today may show the cost of living in the world’s largest economy rose for a fifth month in November, led by higher gasoline prices that aren’t filtering through to other goods and services, according to economists. Santander and BBVA, Spain’s second-largest bank, may decline in Madrid as Moody’s warned that Spain’s debt may increase because of costs to recapitalize the banking industry. Inditex, Siemens Spain’s Inditex might also be active after the retailer reported a 42 percent gain in nine-month net profit to 1.179 billion euros. The average estimate of 12 analysts was 1.17 billion euros, based on Bloomberg calculations. Siemens may move after the company late yesterday said it plans to divest the Siemens SIS unit. The Munich-based company will receive a 15 percent stake in the combined enitity as well as cash and a convertible bond. Novartis AG may rise after the company said it will take full control of Alcon Inc. after agreeing to pay $12.9 billion for stock of the eye-care company it doesn’t already own, ending an 11-month dispute with minority shareholders. Capital Shopping Centres Group Plc may also gain after Simon Property Group Inc. submitted an indicated proposal of 425 pence per share in cash for Britain’s biggest shopping-mall owner. To contact the reporter on this story: Sarah Jones in London at sjones35@bloomberg.net. To contact the editor responsible for this story: David Merritt at dmerritt1@bloomberg.net.

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