Asia Stocks, Currencies Drop, Bond Risk Gains on Recovery Risk

July 19 (Bloomberg) -- Asian stocks fell the most in more than two weeks, regional currencies declined and bond risk increased on concern the global economic recovery is faltering.

The MSCI Asia Pacific excluding Japan Index lost as much as 1.3 percent to 390.04 and traded at 391.81 at 10:53 a.m. in Singapore, heading for its biggest decline since July 1. South Korea’s won fell the most this month, leading a drop in higher- yielding currencies, and bond risk climbed the most in six weeks. Standard & Poor’s 500 Index futures gained 0.2 percent after the gauge slumped 2.9 percent Friday.

U.S. consumer confidence sank to the lowest level in a year and Bank of America Corp., Citigroup Inc. and General Electric Co. reported worse-than-estimated revenue on July 16. Chinese premier Wen Jiabao said on a trip to Shaanxi province that the global recovery was slow and New Zealand reported the jobless rate was likely to stay “elevated” over coming quarters.

The results “point to a U.S. economy in a recovery mode that is at best is patchy,” said Tim Schroeders, who helps manage about $1.1 billion at Pengana Capital Ltd. in Melbourne. “The recovery may require fiscal stimulus to get to a point of being self-sustaining.”

Almost two shares fell for every one that gained on the MSCI Asia Pacific excluding Japan Index. The gauge has tumbled 6 percent this year on concern European efforts to curb deficits and Chinese moves to cool property prices will hurt growth. The Japanese market is closed today.

Australia’s S&P/ASX 200 Index sank 1.2 percent to 4,367.90 and New Zealand’s NZX 50 Index fell 0.6 percent, while South Korea’s Kospi declined 0.1 percent.

James Hardie, Samsung

James Hardie Industries SE, the biggest seller of home siding in the U.S., slumped 1.5 percent in Sydney on concern demand for its products will fall. Samsung Electronics Co., which gets a fifth of its sales in America, sank 0.9 percent in Seoul. BHP Billiton Ltd., the world’s largest mining company, lost 1 percent in Sydney.

China Petroleum & Chemical Corp., Asia’s biggest oil refiner, also known as Sinopec, and PetroChina Co., the country’s largest oil company, dropped as much as 1.8 percent.

An oil spill caused by an explosion in the northeastern Chinese port city of Dalian has “seriously” polluted 11 square kilometers of sea and “slightly” affected 50 square kilometers of water, the Xinhua News Agency reported.

South Korea’s won dropped on concern a faltering recovery in the U.S., the biggest economy, will hurt exports and curb demand for emerging-market assets. The won fell 0.9 percent to 1,214.35 per dollar. Malaysia’s ringgit fell 0.5 percent.

Asian Currencies

“It’s going to be a negative day for Asian currencies,” said Dariusz Kowalczyk, Hong Kong-based senior economist at Credit Agricole CIB. “We’ve seen a pretty substantial increase in global risk aversion, particularly from the U.S., which led investors to pare long positions in risk assets.”

The yen was little changed against the euro at 111.88 from 111.96 in New York last week, after earlier rising to 111.53, the strongest since July 13.

Australia’s dollar fell to a one-week low after Prime Minister Julia Gillard called an election, prompting speculation the central bank will refrain from raising interest rates during the campaign. Australia’s currency fell as much as 0.6 percent to 86.33 U.S. cents.

The cost of protecting Asian bonds from default surged. The Markit iTraxx Asia index of credit-default swaps on 50 investment-grade borrowers outside Japan climbed 9 basis points to 137 basis points as of 8:23 a.m. in Singapore, the biggest jump since June 4, prices from Credit Agricole CIB and CMA show.

Oil for August delivery dropped as much as 51 cents, or 0.7 percent, to $75.50 a barrel on the New York Mercantile Exchange and traded at $75.82 at 11:13 a.m. Singapore time.