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Bloomberg: European Stocks May Drop, Led by BP, Shell After Oil Plunges

By Sarah Thompson

Jan. 19 (Bloomberg) — European stocks may drop, pushed lower by BP Plc and Royal Dutch Shell Plc, after crude oil plunged below $50 a barrel in New York.

SAP AG, Cap Gemini SA and Sage Group Plc are expected to pace a slide by technology shares after International Business Machines Corp., the world’s biggest computer-services company, reported hardware sales that trailed analyst estimates.

Futures on the Dow Jones Euro Stoxx 50, a benchmark for the 13 countries using the euro, fell 11 to 4143 at 7:40 a.m. in London. The U.K.’s FTSE 100 Index is seen dropping 9, according to CMC Markets in London.

Stocks fell for a third day yesterday after Federal Reserve Chairman Ben S. Bernanke said the U.S. government may face a “fiscal crisis” in the coming decades. Investors will be watching a report on U.S. consumer confidence today to further gauge the health of the world’s biggest economy.

“Oil and tech stocks will certainly be major drags on the market,” said Matthew Buckland, a trader at CMC Markets in London. People will also look at the consumer data and if it is “below estimates, it will hit the market big time.”

BP, Europe’s second-largest oil company, and Shell, the region’s biggest, may decline.

Crude oil fell for a second day in New York after plunging below $50 a barrel yesterday for the first time since May 2005 following a surge in U.S. oil and fuel stockpiles.

Oil sank more than 3 percent yesterday after a government report showed U.S. oil inventories jumped 6.77 million barrels, the biggest gain since October 2004, because of higher imports.

Technology Concerns

SAP, the world’s biggest business-management software company, Cap Gemini, Europe’s biggest computer-services company, and Sage, Britain’s biggest maker of accounting software, might drop on concern earnings in the technology industry will slump.

IBM yesterday said fourth-quarter sales of hardware rose 4.3 percent from a year earlier, less than the increase predicted by analysts including Keith Bachman at Banc of America Securities. Growth slowed from an 8.9 percent gain in the third quarter.

IBM joined Apple Inc. and Intel Corp. to usher in the first week of technology earnings with disappointing results. Shares of Apple dropped the most in almost a year yesterday after its forecast for this quarter trailed analysts’ estimates.

Shares in Imperial Tobacco Group Plc, the world’s fourth- largest cigarette company, might decline.

Analysts at Lehman Brothers Holdings Inc. lowered their recommendation to “underweight” from “overweight,” citing concerns that the company may pay too much for future acquisitions amid increasing competition in the U.K.

`Hostile Approach’

Schneider Electric SA might be active. The world’s biggest maker of circuit breakers said fourth-quarter sales rose 12 percent, driven by European growth and acquisitions.

Cie. de Saint-Gobain SA, Europe’s biggest supplier of building materials, may gain after Credit Suisse Group raised its recommendation to “outperform” from “neutral.”

“The potential for a hostile approach will likely add pressure on management to speed up the restructuring process,” the bank wrote in a research note.

Corus Group Plc may rise. The board of India’s Tata Steel Ltd. will meet before Jan. 30 to empower Chairman Ratan Tata to increase an offer price for the U.K. steelmaker to as much as 600 pence a share, the Economic Times reported, citing people it didn’t identify.

ThyssenKrupp AG might gain after Germany’s largest steelmaker said fiscal first-quarter pretax profit more than doubled, beating expectations, after steel demand boosted sales.

Earnings rose to 1 billion euros ($1.3 billion) in the three months ended Dec. 31, from 425.1 million euros a year earlier. The median estimate of seven analysts surveyed by Bloomberg News was for pretax profit of 887 million euros.

Vinci SA, the world’s biggest construction company, is expected to gain after French billionaire Francois Pinault bought a stake worth 1 billion euros.

Pinault bought the stock through his Artemis holding company, spokeswoman Anne-France Malrieu said yesterday. Vinci confirmed that Artemis had informed it of the purchase

To contact the reporters on this story: Sarah Thompson in London at [email protected]

Last Updated: January 19, 2007 02:41 EST

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