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Most European Stocks Drop as IMF Sees Bank Asset Sell-Off

Published: October 10, 2012 | 9:05 am
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Most European stocks dropped after International Monetary Fund said the region’s banks may need to shrink assets and Alcoa Inc. cut its forecast for global aluminum demand, pointing to a slowdown in China. U.S. index futures were little changed, while Asian shares fell.
UniCredit SpA (UCG) slipped 1.2 percent after being named by IMF as one of the banks needing to sell off assets. TNT Express NV (TNTE) slid 1.1 percent after a report that antitrust officials will issue their statement of objections to United Parcel Service Inc.’s bid for the company as early as next week. Fiat SpA (F) retreated after Moody’s Investors Service downgraded its rating.
The Stoxx Europe 600 Index (SXXP) lost 0.1 percent to 269.81 at 8:17 a.m. in London. The benchmark gauge slipped for a second day yesterday as the region’s finance ministers gathered in Luxembourg to discuss the sovereign-debt crisis. Standard & Poor’s 500 Index futures gained less than 0.1 percent today, while the MSCI Asia Pacific Index retreated 0.9 percent.
The IMF said European banks may need to sell as much as $4.5 trillion in assets through 2013 if policy makers fall short of pledges to stem the fiscal crisis. The projection is 18 percent higher than its April estimate. The IMF made the comments in its Global Financial Stability Report released today.
Alcoa (AA), the largest U.S. aluminum producer, kicked off the U.S. earnings season by cutting its forecast for global consumption of the metal by 1 percentage point on slowing Chinese demand.

Bank Shares

UniCredit lost 1.2 percent to 3.40 euros. The lender was among the 58 European Union banks mentioned by IMF as needing to shrink their assets if policy makers fail to implement fiscal tightening or set up a single supervisory system in time. A gauge of European lenders fell for a third day.
Royal Bank of Scotland Group Plc (RBS) rose 1.5 percent to 261.2 pence after agreeing to sell two buildings in Frankfurt and Berlin to Axa Investment Managers SA in the biggest German commercial real estate transaction this year, according to two people with knowledge of the matter.
The properties are valued at about 790 million euros ($1 billion), according to the people, who asked not to be identified because the information is private.

Antitrust Probe

TNT Express retreated 1.1 percent to 8.06 euros after the Financial Times reported that the European Commission will serve UPS with a formal complaint over its 5.2 billion euro takeover bid for the company. The commission is close to completing its in-depth investigation, the paper said, citing people involved in the process.
Fiat slipped 0.8 percent to 4.25 euros after it had its debt rating lowered by Moody’s Investors Service, which cited concern that the automaker’s financial health is deteriorating.
Capita Plc (CPI) fell 0.7 percent to 734.5 pence. RBC Capital Markets downgraded the supplier of services for the British army to sector perform, a recommendation similar to hold, from outperform, a rating equivalent to buy.

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