Most Asian Stocks Drop as China Shares Slip; Yuan Strengthens, Gold Rises

Most stocks fell in Asia as Chinese shares slipped on speculation the country’s central bank may let the yuan strengthen to cool inflation. China’s currency touched a 17-year high against the dollar, gold climbed to a record and shares in Russia rose.

Declines by technology and materials stocks were offset by gains in automakers and industrial shares leaving the MSCI Asia Pacific Index unchanged at 138.82 even as six stocks retreated for every five that advanced. The Shanghai Composite Index slid 0.5 percent, while the yuan gained 0.2 percent to 6.5067. Gold increased to $1,512.47 an ounce, before trading at $1,506.85 at 5:25 p.m. in London. Russia’s Micex jumped 0.8 percent.

More rapid appreciation of the yuan may be a tool for curbing prices, Wang Yong, a professor at the People’s Bank of China’s training center in the city of Zhengzhou, wrote in a commentary published in today’s Securities Times newspaper. Stocks in Asia pared declines after Renesas Electronics Corp. (6723), a Japanese chipmaker, said it will restart operations at a plant damaged by the quake. Most markets in Europe and the Americas were closed today for Good Friday.

“It’s a difficult environment for investors to take a proactive stance right now,” said Yoshinori Nagano, a senior strategist in Tokyo at Daiwa Asset Management Co., which oversees about $104 billion. “There are still a lot of uncertainties for the global economy.”

The MSCI Asia Pacific gauge advanced 2.2 percent this week. Samsung Electronics Co. slid 2.6 percent today. The memory-chip producer said it sued Apple Inc. claiming patent infringement, a week after the iPhone maker filed a complaint in U.S. federal court alleging the South Korean company copied its products.
Toyota, Honda

Renesas Electronics advanced 1.4 percent after the chipmaker that supplies Japan’s carmakers said it plans to resume operations at its Naka plant in Ibaraki prefecture. Toyota Motor Corp. (7203), the world’s biggest carmaker, Honda Motor Co. and Nissan Motor Co. gained more than 2 percent.

The Shanghai Composite Index extended this week’s decline to 1.3 percent, its worst week in three months. The yuan gained after the central bank set the currency’s reference rate 0.11 percent stronger at 6.5156 per dollar, the highest level since July 2005. Twelve-month non-deliverable forwards rose 0.38 percent to 6.3235 per dollar.

Four interest-rate increases and higher bank reserve requirements have failed so far to curb prices, with the consumer-price index rising 5.4 percent in March. A stronger currency makes the country’s exports less competitive.

Gold for immediate delivery advanced 1.4 percent so far this week. Silver for immediate delivery climbed 1.4 percent to $47.25 an ounce, the highest price since 1980.

Emerging Europe

Higher precious metals prices lifted OAO Polymetal, a Russian gold and silver producer, 2.1 percent higher, helping the biggest advance in the Micex. Benchmark equity indexes in Hungary and the Czech Republic declined, snapping three days of gains.

Japan’s bonds rose, pushing 10-year yields to a four-week low, after Prime Minister Naoto Kan’s government compiled a 4 trillion yen ($49 billion) extra budget that didn’t include new debt sales. The yield on the 2021 bond fell 1.5 basis points to 1.21 percent.