Asian Stocks Fall on U.S. Earnings; Yen Gains on Europe Concern

June 25 (Bloomberg) -- Asian stocks dropped the most in nearly three weeks on disappointing sales and earnings forecasts by U.S. companies. The yen traded near a two-week high against the euro on speculation a Group of 20 summit this weekend won’t decide how to tackle Europe’s debt crisis.

The MSCI Asia Pacific Index lost 1.6 percent to 115.29 at 1:45 p.m. in Tokyo with four stocks down for every one that rose. The yen traded at 110.14 per euro in Tokyo from 110.52 in New York yesterday. Standard & Poor’s 500 Index futures were little changed, following a 1.7 percent drop in U.S. trading yesterday.

“People are somewhat circumspect about the prospects for global growth,” said Tim Schroeders, who helps manage about $1.1 billion at Pengana Capital Ltd. in Melbourne. “Doubts about how strong the U.S. recovery is and its trajectory, particularly for the second half of 2010, have increased.”

U.S. reports showing a decline in jobless claims and rise in durable goods orders failed to stem the S&P 500’s longest losing streak in seven weeks yesterday as Dell Inc. forecast 2011 sales below some analysts’ expectations. Nike Inc. shares lost 4 percent after reporting revenue that missed the average of analyst estimates. Group of Eight leaders prepared for a summit today in which they’ll debate how far governments can slash budgets without choking the recovery.

European policy makers fear failure to patch up public finances now risks reviving a bond market selloff that required a bailout for Greece last month, while President Barack Obama says deficit reduction could hurt growth and employment. Obama and colleagues from the G-8 meet today in Huntsville, Ontario, and join their G-20 counterparts tomorrow in Toronto.

Asian Exporters

Asian exporters to the U.S. declined after Dell, the world’s third-largest maker of personal computers, said fiscal 2011 earnings may be as little as $60.31 billion, compared with analysts’ predictions of $61.79 billion. Bed Bath & Beyond Inc., a retailer of home-furnishings, forecast second-quarter earnings that missed analyst estimates.

Toyota Motor Corp., the world’s largest automaker, lost 1.6 percent in Tokyo. Canon Inc., a camera maker that gets about 80 percent of revenue outside Japan, fell 4.3 percent. BHP Billiton, the biggest mining company, slid 1.9 percent. The No. 1 computer memory chipmaker, Samsung Electronics Co., slipped 2.1 percent.

The MSCI Emerging Markets Index fell 0.8 percent, the fourth straight decline, set for its longest losing streak in seven weeks. Net inflows to developing-nation stock funds this year have reached 57 percent of the tally for the same period in 2009 even after money managers got fresh funds in the week ended June 23, EPFR Global said in an e-mailed statement.

Taiwan Rates

Taiwan’s Taiex index fell 1.7 percent after the central bank unexpectedly raised its benchmark interest rate for the first time since 2008 and urged lenders to increase risk controls on mortgage loans. Farglory Land Development Co., Taiwan’s biggest real-estate developer, plunged 5.7 percent. The South Korean benchmark Kospi index declined 0.8 percent, paring its fourth straight weekly advance.

Copper dropped in London, trimming the third weekly gain in 11 weeks, as signs of a slowdown in the recovery offset expectations of a stronger yuan and a weaker dollar. Zinc also declined. Three-month delivery copper fell 1.4 percent to $6,600 a metric ton on the London Metal Exchange. Zinc fell 1.6 percent to $1,844.25 a ton.

Yuan Gains

The yuan headed for its biggest weekly gain since December 2008 as China set the currency’s daily reference rate at a record high against the dollar, allowing appreciation before the G-20 meeting which President Hu Jintao will attend. Obama said yesterday that it’s “too early to tell” whether China’s decision to allow more flexibility in its currency will be sufficient to rebalance the world economy.

The yuan was at 6.79 per dollar as of the 9:30 a.m. open in Shanghai, up 0.14 percent. It has gained 0.53 percent this week, the most since December 2008. Chinese Foreign Ministry spokesman Qin Gang told reporters in Beijing yesterday that a revalued yuan won’t solve U.S. economic woes.

Crude oil traded below $77 a barrel in New York, poised for the first weekly decline in three. Crude for August delivery was at $76.17 a barrel, down 34 cents, in electronic trading on the New York Mercantile Exchange.

The cost of protecting Asia-Pacific bonds from non-payment rose, according to traders of credit-default swaps.

The Markit iTraxx Japan index advanced 3.5 basis points to 136.5 basis points in Tokyo, according to Morgan Stanley. The Markit iTraxx Australia index increased 3 basis points to 133 basis points in Sydney, according to Nomura Holdings Inc.

The Markit iTraxx Asia index of 50 investment-grade borrowers outside Japan rose 2 basis points to 135 in Singapore, Royal Bank of Scotland Group Plc prices show. A basis point is 0.01 percentage point.