Asian stocks fell, dragging the MSCI Asia Pacific Index to a one-month low, as concerns the economic recovery will falter caused automakers and mining shares to drop. Treasuries and the yen rose as demand for haven assets increased.
Toyota Motor Corp., which gets 31 per cent of its revenue in North America, retreated 3.1 per cent in Tokyo after its US sales slumped last month. BHP Billiton Ltd., the world's biggest mining company, sank 2.5 per cent in Sydney after metal prices dropped. Yields on 10-year Treasuries fell to the lowest level since May and the yen extended gains after CIT Group Inc. said it may file for bankruptcy protection.
The MSCI Asia Pacific Index lost 1.9 per cent to 114.53 in Tokyo, set for the lowest close since Sept. 7. The gauge has declined 2.8 per cent this week, during which the measure capped its second-straight quarterly advance. It has climbed 58 per cent in the past seven months.
"There seems to be growing consensus that the pace of the recovery will slow," said Kiyoshi Ishigane, a senior strategist at Mitsubishi UFJ Asset Management Co., which oversees the equivalent of $56 billion. "There is a question mark over a further rebound in consumption and production."
Japan's Nikkei 225 Stock Average slumped 2.5 per cent even after the statistics bureau said the unemployment rate fell to 5.5 per cent in August from a record 5.7 per cent in July. Panasonic Corp. dropped 3.9 per cent on a brokerage downgrade, while Aomori Bank Ltd. tumbled 18 per cent on share-sale plans.
US data
Hong Kong's Hang Seng Index fell 2.3 per cent, with Li & Fung Ltd., the biggest supplier of clothes and toys to Wal-Mart Stores Inc., slumping 3.8 per cent. Australia's S&P/ASX 200 Index sank 1.8 per cent. Singapore's Straits Times Index dropped 1.5 per cent. All markets in the region that were open declined. China, India and South Korea are closed for holidays.
Futures on the Standard & Poor's 500 Index slipped 0.3 per cent. The gauge declined 2.6 per cent yesterday after reports on the reports on manufacturing and jobless claims missed economists' estimates. A government report due later today may show US employers cut jobs for a 21st month in September.
The MSCI Asia Pacific Index is set for its biggest weekly decline in more than a month as a Bank of Japan survey showed companies planned to further cut investment, while US economic data missed economist estimates.
The US Labor Department may report today that the country's employers shed 175,000 jobs in September after a reduction of 216,000 in August, according to the median forecast of economists surveyed by Bloomberg News.
High expectations
Toyota, Japan's largest carmaker, fell 3.1 per cent to 3,400 yen after its US sales slumped 13 per cent in September following the end of the "cash for clunkers" rebate program. Honda Motor Co., which had a 20 per cent drop in US sales, dropped 3.3 per cent to 2,675 yen.
"Expectations about the economic outlook have been too high," said Juichi Wako, a senior strategist at Tokyo-based Nomura Holdings Inc. "For now, we have nothing that can lift the market."
Li & Fung slipped 3.8 per cent to HK$30.05 in Hong Kong. Panasonic, Japan's largest maker of home appliances, sank 3.9 per cent to 1,243 yen as Mizuho Securities Co. cut its recommendation on the company to "reduce" from "hold."
Japanese exporters also fell amid concerns a stronger yen will reduce the value of repatriated overseas sales. The currency strengthened to 130.10 versus the euro from 130.35 in New York yesterday and rose to 89.52 per dollar from 89.60.
"Risk aversion is coming back with stocks falling and the US economic outlook remaining iffy," said Masato Mori, senior manager of the business and marketing department at NTT SmartTrade Inc., a unit of Nippon Telegraph & Telephone Corp.
CIT Collapse?
The yield on the 10-year Treasury note fell two basis points to 3.16 per cent, according to BGCantor Market data. The yield, which has declined 15 basis points this week, is at the lowest since May 21 amid concerns CIT, a 101-year-old commercial lender will fail to cut debt and raise capital.
In Sydney, BHP shares lost 2.5 per cent to $36.28 after a gauge of six metals, including copper, dropped 2.8 per cent yesterday in London, breaking a three-day winning streak. Copper futures in New York decreased 1.1 per cent, extending yesterday's 2.9 per cent slump.
Nippon Mining Holdings Inc. fell 3.6 per cent to 425 yen in Tokyo. The company's metal unit owns 66 per cent of Pan Pacific Copper Co., Japan's biggest smelter of the metal. Maanshan Iron & Steel Co., the second-biggest Hong Kong-listed Chinese steelmaker, declined 4.7 per cent to HK$4.46.
Spending packages
Platinum Australia , which owns mines in South Africa and Australia, sank 4.5 per cent to 84.5 Australian cents after completing a share sale to raise $30 million.
Signs that lower borrowing costs and spending packages were dragging economies out of recession have fueled the seven-month stock rally. MSCI's Asian index this week completed its second quarterly advance, gaining 14 per cent in the three months through Sept. 30.
The advance was less than the previous quarter's 28 per cent increase amid valuation concerns. The average price of the MSCI Asia Pacific Index's shares rose to 1.6 times book value on Sept. 17, up from 1 at the measure's five-year low on March 9.
"We believe that the recovery prospects are a bit overplayed," Arnout van Rijn, chief investment officer of Robeco Hong Kong Ltd., told Bloomberg Television today.
Aomori Bank plunged 19 per cent to 294 yen. The bank said yesterday it planned to raise as much as 11.6 billion yen ($1US30 million) in a sale of new shares.
Japan's three largest banks, Mitsubishi UFJ Financial Group Inc., Sumitomo Mitsui Financial Group Inc. and Mizuho Financial Group Inc., have raised 1.8 trillion yen by selling stock since the end of December.
China Petroleum & Chemical Corp. retreated 2.6 per cent to $HK6.42. Asia's biggest refiner may be banned by Iraq from the second round of bidding on oil and natural-gas projects because the company hasn't given up its contract in the country's northern Kurdistan area, the Wall Street Journal reported.