Asian Stocks Post Weekly Drop on Signs Global Recovery Waning

July 3 (Bloomberg) -- Asian stocks fell, dragging the MSCI Asia Pacific Index to its fourth weekly decline in five, as weaker manufacturing growth in the U.S., Europe and China added to signs global economic recovery is faltering.

Canon Inc., the world’s biggest camera maker that counts the U.S. as its second-biggest market, fell 7.7 percent. Foxconn International Holdings Ltd., the world’s biggest contract maker of mobile phones, tumbled 13.3 percent after predicting a wider first-half loss. Hyundai Motor Co. and Toyota Motor Corp. dropped at least 3.7 percent as car sales in the U.S. grew at a slower pace. BHP Billiton Ltd., the world’s largest mining company, fell 4.4 percent as commodity prices slipped.

“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 Co., which oversees about $65 billion. “Moves by countries around the world to tighten fiscal policies are behind the plunge in markets.”

The MSCI Asia Pacific Index fell 3.4 percent to 111.70. The gauge has slumped 7.3 percent this year amid concerns Europe’s debt crisis and Chinese steps to curb property prices will hurt global growth.

China’s Shanghai Composite Index declined 6.7 percent, the biggest decline among benchmark indices in the Asia-Pacific after the New York-based Conference Board revised down an estimate for China’s growth and the country’s manufacturing expanded at a slower-than-expected pace. Hong Kong’s Hang Seng Index slipped 3.8 percent.

Faltering Growth

Japan’s Nikkei 225 Stock Average lost 5.5 percent, after the yen strengthened for a fourth week, dragging shares of Japanese exporters such as Canon Inc. and Sony Corp. lower. Australia’s S&P/ASX 200 Index dropped 4 percent, while South Korea’s Kospi Index sank 3.4 percent.

Gauges of raw material producers and electronics companies led this week’s decline as economic numbers released this week from China, Europe and the U.S. deteriorated.

Reports on U.S. manufacturing, employment and home sales pointed to slower growth in the second half of the year. The Institute for Supply Management’s manufacturing gauge released on July 1 fell more than forecast. Other data released on the same day showed contracts to buy existing homes tumbled in May, and claims for jobless benefits unexpectedly rose last week. A report by the New York-based Conference Board on June 29 also showed confidence among consumers declined more than forecast last month.

Slower Sales

Canon, which got about 28 percent of sales from the U.S. last year, fell 7.7 percent to 3,260 yen. Sony, the maker of Playstation gaming consoles and Bravia televisions, dropped 5.4 percent to 2,310 yen. Panasonic Corp., the world’s largest maker of plasma TVs, slipped 5.8 percent to 1,098 yen.

Shares of Asian automakers dropped as data released by Autodata Corp. on July 1 showed the growth in sales in the U.S. decelerated to 14 percent last month from a year earlier, after gains of 19 percent in May and 20 percent in April.

Toyota, the world’s biggest carmaker, slid 3.7 percent to 3,020 yen. Honda Motor Co., which counts North America as its biggest market, declined 6.8 percent to 2,495 yen. Hyundai Motor Co., South Korea’s biggest carmaker, dropped 7.7 percent to 132,500 won.

Japanese exporters also declined as a stronger yen threatened to reduce the value of overseas sales when repatriated. The dollar fell for a fourth week against the yen as signs the global recovery is faltering boosted demand for safer assets.

Australia Tax Agreement

Foxconn, controlled by Taiwan’s Hon Hai Precision Industry Co., slumped 13.3 percent to HK$4.88, the third-biggest decline on the MSCI Asia Pacific Index. The company said on June 29 its first-half loss will widen in part because of lower prices for its products and higher depreciation expenses, triggering a wave target price cuts from Citigroup Inc., Goldman Sachs Group Inc. and JPMorgan Chase & Co.

Shares of mining companies declined as weaker commodity prices weighed on the sector even as Australian Prime Minister Julia Gillard scaled back a proposed tax on mining companies.

BHP Billiton Ltd. declined 4.4 percent to A$37.09. Rio Tinto Ltd., the world’s third-biggest mining company, dropped 6.2 percent to A$65.30. Jiangxi Copper Co., China’s biggest supplier of the metal, lost 6 percent to HK$14.46.

The Reuters/Jefferies CRB Index, which tracks prices of commodities from copper to corn, dropped 4.2 percent amid heightened concern over the economic health of the China.

China Forecasts Cut

China’s manufacturing growth slowed more than economists forecast in June, data released on July 1 showed. The Conference Board on June 29 corrected down its April gauge for the nation’s economic outlook due to a calculation error.

Goldman Sachs Group Inc. yesterday cut its real gross domestic product growth forecast for China this year to 10.1 percent from 11.4 percent, joining BNP Paribas, Macquarie Securities Ltd. and China International Capital Corp. in doing so.

Companies with substantial business in Europe dropped after two surveys released on July 1 showed factory output in the 16- member euro region weakened for a second month.

Esprit Holdings Ltd., the Hong Kong-based clothier that counts Europe as its biggest market, dropped 5.5 percent to HK$42. Li & Fung Ltd., the supplier of toys and home furnishings that got 27 percent of sales from Europe last year, dropped 10 percent to HK$34.85. Billabong International Ltd., the world’s biggest publicly traded surfwear maker, lost 2.7 percent to A$8.64.