European Stocks Fall; Fortis, Deutsche Bank, ING Pace Decline

European stocks retreated, led by financial companies, after Morgan Stanley said the outlook for credit markets worsened and Fortis reported profit that trailed analysts' estimates.

Fortis sank the most in more than two years. Deutsche Bank AG and Credit Suisse Group also declined. ING Groep NV fell after brokerages downgraded the financial-services company, saying earnings will suffer from subprime-mortgage investments.

``We'll probably have some more bad news out of the banking sector,'' said Julian Chillingworth, who helps oversee $25 billion as chief investment officer at Rathbone Unit Trust Management in London. ``A lot of financial companies have bought assets they don't fully understand, so it won't be just the banks.''

Europe's Dow Jones Stoxx 600 Index slid 0.3 percent to 374.55 at 12:45 p.m. in London. The measure clawed back more than two-thirds of its earlier losses after BHP Billiton Ltd. said it offered to buy Rio Tinto Group, a proposal that was rejected.

The euro traded near an all-time high against the dollar today on speculation European Central Bank President Jean-Claude Trichet will signal plans to raise the benchmark interest rate in coming months.

The ECB left borrowing costs unchanged today. Trichet is scheduled to hold a press conference to explain the bank's decision at 2:30 p.m. in Frankfurt. Separately, the Bank of England kept its rate on hold today.

The risk of European companies defaulting on their debt rose to the highest in more than three months, according to traders of credit-default swaps.
microcap-market.com