Asian stocks fell, sending the MSCI Asia Pacific Index to its biggest four-day slump since August, as commodity shares sank after Chinese Premier Wen Jiabao said the cabinet is drafting plans to stem inflation.
Rio Tinto Group, the world?s third-biggest mining company, dropped 3 percent in Sydney after oil and metal prices sank in New York. Mitsubishi Corp., Japan?s largest commodities trader, lost 0.8 percent in Tokyo. Esprit Holdings Ltd., a fashion retailer that gets most of its sales in Europe, lost 2.3 percent in Hong Kong amid concern Ireland?s debt crisis is worsening. Hyundai Engineering & Construction Co. tumbled 4.7 percent in Seoul after brokerages cut their investment ratings.
The MSCI Asia Pacific Index fell 0.6 percent to 129.83 as of 1:55 p.m. in Tokyo, with about twice as many stocks declining as rising. The index is headed for its lowest close this month.
?China coming back with tightening talk is making the market nervous again,? said Nader Naeimi, a Sydney-based strategist at AMP Capital Investors Ltd., which manages about $85 billion. ?All the fears are back over China going too far, and what that will do to growth in the region. It?s giving investors the excuse to lock in profits.?
Hong Kong?s Hang Seng Index retreated 0.7 percent after three days of record trading, and China?s Shanghai Composite Index dropped 1.2 percent.
Japan?s Nikkei 225 Stock Average and South Korea?s Kospi Index were little changed. Australia?s S&P/ASX 200 Index declined 1.4 percent. Bourses in Singapore, Malaysia, Indonesia, India and Pakistan are closed for holidays.
Commodities Decline
Futures on the Standard & Poor?s 500 Index gained 0.4 percent today. The index decreased 1.6 percent yesterday in New York, the most since Aug. 19, on concern about China and Ireland.
Material and energy companies slumped the most today among the MSCI Asia Pacific Index?s 10 industry groups. Rio Tinto dropped 3 percent to A$83.83 in Sydney and BHP Billiton Ltd., the world?s largest mining company, fell 2 percent to A$43.56. They were the two heaviest drags on the MSCI Asia Pacific Index.
China Petroleum & Chemical Corp., the nation?s largest oil refiner, lost 1.4 percent to HK$7.28 in Hong Kong, and Aluminum Corp. of China Ltd., part of the country?s biggest maker of the lightweight metal, decreased 1.4 percent to HK$7.14. Cnooc Ltd., China?s No. 1 offshore oil explorer, sank 2 percent to HK$ 16.60.
Crude oil for December delivery dropped 3 percent yesterday in New York to $82.34 a barrel, the lowest settlement price since Oct. 29. Copper futures for March delivery tumbled 4.9 percent yesterday, the biggest decrease since June 29. The London Metal Exchange Index of prices for six industrial metals including copper and aluminum plunged 6.3 percent yesterday.
China, Commodities
Chinese Premier Wen Jiabao said in comments broadcast last night that the cabinet is drafting measures to counter overly rapid price gains.
The People?s Bank of China in October raised its benchmark interest rates for the first time since 2007 and last week boosted lenders? reserve-requirement ratios by as much as one percentage point, seeking to tame the fastest inflation in two years. Consumer prices jumped 4.4 percent in October from a year earlier, exceeding all 28 estimates in a Bloomberg survey.
?There are worries demand will decrease on China?s tightening policies,? said Hiroichi Nishi, an equities manager in Tokyo at Nikko Cordial Securities Inc. ?Pressure to sell stocks, mainly commodity-related shares, will increase.?
Woodside Petroleum Ltd., Australia?s second-biggest oil and gas producer, lost 2.2 percent to A$41.25, and Paladin Energy Ltd., which produces uranium in Africa, plunged 4.8 percent to A$4.37 after being downgraded to ?hold? from ?buy? at Paradigm Capital.
Mitsubishi Corp. lost 0.8 percent to 2,085 yen in Tokyo. Korea Zinc Co., the world?s second-biggest zinc smelter, decreased 2.7 percent to 290,000 won in Seoul.
Relative Gains, Valuations
The MSCI Asia Pacific Index increased 8.5 percent this year through yesterday amid signs a U.S. economic recovery was regaining momentum and optimism that Europe?s debt crisis could be contained. That compares with gains of 5.7 percent by the S&P 500 and 4.8 percent by the Stoxx Europe 600 Index.
Stocks in the Asian benchmark are valued at 14.4 times estimated earnings, compared with 13.9 times for the S&P 500 and 12 times for the Stoxx 600.
Esprit sank 2.2 percent to HK$40.50 in Hong Kong. Billabong International Ltd., a surfwear maker with more than a fifth of its sales in Europe, retreated 2.4 percent to A$8.17 in Sydney, while Canon Inc., which gets more than 30 percent of its sales in Europe, declined 1.3 percent to 3,910 yen in Tokyo.
?Sovereign-Debt Risk?
Ireland is in talks with European and International Monetary Fund officials about a bailout that would enable the country to inject capital into its banks, said a European official with direct knowledge of the talks.
?Sovereign-debt risks create added risk for financial institutions who hold such debt, which in turn sees access to credit become more difficult,? said Angus Gluskie, who manages about $350 million at White Funds Management Pty. in Sydney. ?Further budget tightening in affected countries will tend to delay the development of a more meaningful economic recovery.?
Hyundai Engineering tumbled 4.7 percent to 59,300 won in Seoul. BNP Paribas SA cut its rating to ?hold? from ?buy? and Hana Daetoo Securities Co. lowered its recommendation to ?neutral? from ?buy? after Hyundai Group was named yesterday as the preferred bidder for a stake in the builder.
To contact the reporter for this story: Shani Raja in Sydney at sraja4@bloomberg.net.
To contact the editor responsible for this story: Nick Gentle at ngentle2@bloomberg.net.
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