Stocks in Europe and Asia and U.S. futures slumped, while Treasuries and gold rose as Warren Buffett said the American economy is in a “shambles” and concern grew that financial firms will need more capital.
HSBC Holdings Plc slipped 10 percent after saying it plans to raise 12.5 billion pounds ($17.7 billion) in a rights offer. Commerzbank AG and BNP Paribas SA slid more than 5 percent. Mitsubishi UFJ Financial Group Inc., Japan’s biggest bank, retreated 6.8 percent as the nation’s wage declines accelerated. BHP Billiton Ltd., the world’s largest mining company, lost 4.7 percent as industrial metals and oil dropped.
“This is a bear market and patience is what you need,” said Lucy MacDonald, London-based chief investment officer of global equities at RCM UK Ltd., which has about $100 billion under management. “We need to see stabilizing of economic and corporate profit growth,” she said in a Bloomberg Television interview.
The MSCI World Index of 23 developed countries sank 1.5 percent to 739.27 at 9:50 a.m. in London, extending its 2009 decline to 20 percent, the worst start to a year since the gauge was created in 1970. The MSCI Emerging Markets Index slid 3.4 percent, while Hungary’s forint fell after European Union leaders spurned aid pleas for eastern Europe.
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Futures on the Standard & Poor’s 500 Index expiring this month dropped 1.5 percent. Buffett, chairman of Berkshire Hathaway Inc. said in his annual letter to shareholders that the U.S. economy will be a “shambles” this year and perhaps longer, before recovering from the reckless lending that caused the worst “freefall” he ever saw in the financial system.