Intel leads big retreat in world markets after reported broker downgrade

Intel leads big retreat in world markets

LONDON — World stocks slid Thursday after analysts at Bank of America Merrill Lynch reportedly downgraded their recommendations on a series of U.S. technology stocks, including Intel Corp. That feeded mounting concerns that current valuations are not justified by the pace of the global economic recovery.

In Europe, the FTSE 100 index of leading British shares closed down 74.43 points, or 1.4 percent, at 5,267.70 while Germany’s DAX fell 85.43 points, or 1.5 percent, to 5,702.18. The CAC-40 in France ended 67.94 points, or 1.8 percent, lower at 3,760.22.

On Wall Street, the Dow Jones industrial average was down 149.72 points, or 1.4 percent, at 10,276.59 around midday New York time while the broader Standard & Poor’s 500 index fell 19.12 points, or 1.7 percent, at 1,090.68.

Technology stocks in the U.S. were at the sharp end of Thursday’s retreat in the U.S. after Bank of America Merrill Lynch downgraded their recommendations on ten stocks, including Intel Corp., Texas Instruments Inc. and Marvell Technology Group Ltd, said David Buik, markets analyst at BGC Partners. Intel was down over 5 percent, making it the biggest faller on the Dow.

The downgrades fed into a growing feeling in the markets that stock valuations are now pricing in too rapid an economic recovery.

Stock markets have rallied strongly since March’s lows as investors reined in their economic doomsday expectations to factor in a swifter than anticipated global economic rebound, but recent disappointing U.S. housing figures have dented the optimism.

Figures Thursday from the Mortgage Bankers Association showing that more than 14 percent of American homeowners with a mortgage were either behind on their payments or in foreclosure at the end of September added to the gloom.

Mixed earnings from some of the country’s leading retailers have also weighed on sentiment as household spending in the U.S. is key for recovery — it accounts for around 70 percent of the nation’s economy.

A second consecutive quarterly loss from Sears Holdings Inc. did little to ease concerns that the upcoming Christmas trading period may not be as strong as many in the markets have been predicting.

Further insights will be looked for in results later from Gap Inc.

Encapsulating the negative mood was the reaction to what at first glance appeared to be rosy economic forecasts from the Paris-based Organization for Economic Cooperation and Development. Markets ignored the fact that it more than doubled its estimate for 2010 growth in its 30 member countries — which include the U.S., Japan and Germany — to 1.9 percent and raised its 2011 forecast to 2.5 percent.

“Neither of these figures is exceptional which underpins the delicate nature of the present economic recovery,” said Jane Foley, research director at Forex.com.

Earlier, Japan’s Nikkei 225 stock average lost 127.33 points, or 1.3 percent, to 9,549.47 — its seventh straight day of decline as investors succumbed to jitters about a possible glut of new bank shares after Mitsubishi UFJ announced plans to raise capital. The bank’s shares fell 3.7 percent.

Elsewhere, Hong Kong’s Hang Seng fell 0.9 percent to 22,643.16, while Taiwan’s benchmark shed 0.1 percent and Indonesia’s market was 0.6 percent lower.

Other markets fared better: South Korea’s Kospi added 1 percent to lead the region and China’s Shanghai index rose 0.5 percent. In Singapore, shares were up 0.6 percent after the city-state reported a second straight quarter of growth as manufacturing and service sectors helped it surface from a deep recession. The economy was seen expanding between 3 percent and 5 percent next year, the government said.

Oil prices fell sharply alongside stocks with benchmark crude for December delivery down $2.30 to $77.28 a barrel.

Gold prices eased after a strong run saw it top $1,150 per ounce for the first time ever — they were down $8.10 an ounce, or 0.7 percent, to $1,140.30.

The dollar fell 0.4 percent to 88.95 but was up against the euro, which was trading 0.6 percent lower at $1.4877.

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AP Business Writer Jeremiah Marquez in Hong Kong contributed to this report.