Asian stocks fell for a second day, extending a global rout, as a slump in US consumer confidence fueled concerns about the strength of the global economy.
BHP Billiton, the world's largest mining company, declined 2.1 per cent after the drop in the US Conference Board's confidence index contributed to the biggest slump in commodity prices in 10 months. Honda and Canon, which get more than a quarter of their revenue in the Americas, slid more than 2 per cent in Tokyo as a stronger yen dented their profit outlooks. Shin-Etsu Chemical led chip shares lower after Mizuho Securities cut its investment rating.
The MSCI Asia Pacific Index dropped 1.4 per cent to 112.31 as of in Tokyo, set to close at the lowest level since June 10 and poised for its first quarterly decline in five. The gauge has slumped 13 per cent from its high this year on April 15 on concern Europe's debt crisis and Chinese steps to curb property prices will hurt global growth.
''The view is spreading among investors that a recovery in the global economy won't be as easy as people had expected,'' said Kiyoshi Ishigane, a strategist in Tokyo at Mitsubishi UFJ Asset Management. ''Moves by countries around the world to tighten fiscal policies are behind the plunge in markets.''
Japan's Nikkei 225 Stock Average lost 2.1 per cent, while Australia's S&P/ASX 200 Index dropped 1.7 per cent. The Kospi declined 1.4 per cent in Seoul.
'Strong headwinds'
Futures on the Standard & Poor's 500 Index increased 0.4 per cent. The gauge yesterday slumped 3.1 per cent to its lowest level since October 30 after the Conference Board's gauge of confidence among consumers slumped to 52.9 this month from a revised 62.7 in May as Americans became pessimistic about the outlook for the labor market and the economy.
The MSCI World Index dropped 0.2 per cent. The gauge slid 3.2 per cent yesterday after the Conference Board revised its April leading economic index for China to a 0.3 per cent increase from a gain of 1.7 per cent reported June 15. China's exports face ''strong headwinds'' in the second half of the year from policy tightening measures and the European debt crisis, Citigroup Inc. said in a report obtained yesterday.
''It's not a bad thing that the Chinese government is trying to cool down the economy, but it's had a negative impact on market sentiment,'' said Khiem Do, Hong Kong-based head of multi-asset strategy at Baring Asset Management (Asia).
Mining stocks slump
Speculation global growth will slow has helped drag the average price of stocks in the MSCI Asia Pacific Index down to about 14.2 times estimated profit, compared with 24 times a year earlier. The gauge lost 0.5 per cent last week after new-home sales in the US tumbled to a record low, threatening the nation's stimulus-driven recovery.
BHP, Australia's biggest oil producer, sank 2.1 per cent to $37.31. Rio Tinto Group, the world's third biggest mining company, lost 3.1 per cent to $66.30. Mitsubishi Corp, which trades commodities, fell 3 per cent to 1845 yen in Tokyo.
The Reuters/Jefferies CRB Index of 19 raw materials tumbled 2.8 per cent yesterday, the most since August 14. Copper futures in New York lost 5.2 per cent, while oil declined 3 per cent.
Japanese exporters declined as the stronger yen threatened to reduce the value of overseas income when repatriated. The yen appreciated against the euro to as much as 107.74 today from 108.82 at the close of stock trading in Tokyo yesterday. Japan's currency rose to as much as 88.44 per dollar from 88.76.
Honda sank 2.3 per cent to 2587 yen. Canon declined 3 per cent to 3295 yen. Nissan, which gets about a third of its sales in North America, fell 1 per cent to 623 yen.
Shin-Etsu downgrade
Shin-Etsu, which makes silicon wafers for semiconductors, lost 3.7 per cent to 4,190 yen after Mizuho cut its investment rating to ''neutral'' from ''outperform.''
Sumco, a competitor, sank 4.2 per cent to 1454 yen. Tokyo Electron, the world's second-biggest maker of semiconductor equipment, declined 3.1 per cent to 4855 yen.
Chip stocks in Asia also fell after Micron Technology, the largest US maker of computer memory, slumped the most in 19 months yesterday on speculation it has too many unsold chips and that output of other products isn't increasing fast enough.
In Seoul, Samsung, the world's second- largest maker of mobile phones, slumped 2.2 per cent to 775,000 won, while Hynix Semiconductor, the world's second-largest computer-memory chipmaker, declined 2.5 per cent to 24,950 won.
Dena, which operates auction and shopping websites, tumbled 8.6 per cent to 2353 yen, the biggest decline in the MSCI Asia Pacific Index. The stock was downgraded to ''hold'' from ''buy'' at Deutsche Bank.