Asian Stocks Decline on Commodities Slump, U.S. Economy Reports

June 4 (Bloomberg) -- Asian stocks dropped for the first time in five days, led by mining and energy companies, as commodity prices slumped and a U.S. report showed the service sector improved less than expected.

BHP Billiton Ltd. and Rio Tinto Group, the world’s largest and third-largest mining companies, declined more than 4 percent after a gauge of commodity prices fell the most in six weeks. Cnooc Ltd., China’s largest offshore oil producer, sank 3.8 percent in Hong Kong. Japan’s Konami Corp., a game maker that gets 17 percent of profit from the Americas, lost 3.1 percent.

“It’s all probably come a bit too far, too fast,” said Matt Riordan, who helps manage about $3.2 billion at Paradice Investment Management in Sydney. “Where there are doubts about the recovery, you’re going to see volatility. Things seem to be improving, but if we continued to see more bad data it would have to worry you.”

The MSCI Asia Pacific Index fell 1.3 percent to 103.43 as of 12:40 p.m. in Tokyo, ending a four-day, 4.6 percent advance that took valuations on the gauge to an eight-month high. The measure rallied 48 percent through yesterday from a five-year low on March 9 on optimism the global economy is recovering.

Japan’s Nikkei 225 Stock Average fell 0.3 percent, while Australia’s S&P/ASX 200 Index sank 1.6 percent, as Finance Minister Lindsay Tanner told the government broadcaster that the economy was in a “serious downturn,” even after an unexpected expansion last quarter. South Korea’s Kospi Index slipped 1.2 percent as the government cautioned against being too optimistic about the economic outlook.

World’s Biggest Economy

Futures on the U.S. Standard & Poor’s 500 Index were little changed. The gauge fell 1.4 percent yesterday, retreating from a seven-month high. The Institute for Supply Management’s index of non-manufacturing businesses, which make up almost 90 percent of the world’s biggest economy, climbed to 44 from 43.7 in April. Economists predicted the index would rise to 45. A separate report showed U.S. companies cut 532,000 workers from payrolls.

BHP lost 4.2 percent to A$35.49, while Rio slumped 5.8 percent to A$67.47. The Reuters/Jefferies CRB Index dropped 2.7 percent, the biggest decline since April 20 for the gauge of energy, metals and crops. Separately, a measure of metals traded in London declined 1.8 percent, while crude oil in New York fell the most in two weeks.

Cnooc sank 3.8 percent to HK$10.54. Woodside Petroleum Ltd., Australia’s second-biggest oil and gas producer, dipped 3.2 percent to A$43.35.

Best Performers

Raw-materials producers and energy companies are the best performing of the MSCI Asia Pacific Index’s 10 industry groups in the past three months as signs of a global recovery emerged. Japan last week raised its assessment of the world’s second- largest economy for the first time in three years.

Australia’s statistics bureau said yesterday gross domestic product gained 0.4 percent in the first quarter from the previous three months, compared with economist forecasts for a 0.2 percent contraction.

Prime Minister Kevin Rudd said that without payments to lower-income earners, the economy would have contracted about 0.2 percent in the quarter.

Stock gains since March have driven the average valuation of companies on MSCI’s Asian index to 1.5 times the book value of assets, the highest level since Oct. 1.

“We have been looking for a correction in the past three weeks as valuations have become stretched,” said Daphne Roth, Singapore-based head of Asia equity research at ABN Amro Private Bank, which manages $27 billion of Asian assets. “We’ve seen a lot of these green shoots in the macro economic data but we have yet to see consumption in the U.S. picking up.”

Harvey Norman Holdings Ltd., Australia’s biggest electronics retailer, slumped 4.2 percent to A$3.16. The stock jumped 5.8 percent yesterday to a one-month high after the country’s GDP figures.

In Tokyo, Konami lost 3.2 percent to 1,731 yen. The company slashed its profit forecast by 45 percent in April.