Asian Stocks Head for Lowest in a Week Amid Europe Debt Talks Uncertainty By Kana Nishizawa - Oct 19, 2011

Asian stocks slid, with the benchmark regional index headed to its lowest close in more than a week, amid uncertainty about European bailout-fund talks and as U.S. companies grew more pessimistic about the outlook for the world’s largest economy.

Sharp Corp., a Japanese maker of liquid-crystal displays that gets about half of its revenue overseas, fell 2.2 percent in Tokyo. Esprit Holdings Ltd. (330), a clothier that gets most of its sales in Europe, sank 6.9 percent in Hong Kong. BHP Billion Ltd., the world’s biggest mining company, dropped 2.1 percent as commodity prices dropped. Newcrest Mining Ltd. (NCM), Australia’s largest gold mining company, sank 5.3 percent after saying quarterly gold output sank from a year earlier.

The MSCI Asia Pacific Index sank 1.3 percent to 115.82 as of 11:44 a.m. in Tokyo, headed for its lowest close since Oct. 11. Almost four stocks fell for each for each that gained on the gauge.

“U.S. economic conditions don’t appear to be getting any better, and in fact there’s some risk it might get worse, so that doesn’t give investors much comfort at all,” said Angus Gluskie, who manages more than $300 million at White Funds Management in Sydney. “There appears to be growing concern about whether or not European leaders meeting on the weekend will be able to come up with a credible plan.”

The MSCI Asia Pacific Index declined 15 percent this year through yesterday, as Europe’s smoldering debt crisis, slowing U.S. economic growth and tighter monetary policy in China crimped the earnings outlook for the region’s companies. Europe’s leaders have pledged to use a meeting this weekend to develop a plan to tackle the crisis.
Australia, Japan

Australia’s S&P/ASX 200 slid 1.5 percent. Japan’s Nikkei 225 (NKY) Stock Average retreated 0.9 percent. Hong Kong’s Hang Seng Index lost 1.7 percent, while South Korea’s Kospi Index fell 0.1 percent. Singapore’s Straits Times Index lost 0.4 percent.

The Asia-Pacific measure’s slide compares with a 3.8 percent drop by the Standard & Poor’s 500 Index and a 14 percent loss by the Stoxx Europe 600 Index. Stocks in the Asian benchmark are valued at 11.9 times estimated earnings on average at the last close, compared with 12.1 times for the S&P 500 and 10.2 times for the Stoxx 600.

Futures on the S&P 500 expiring in December were little changed today. In New York the index lost 1.3 percent yesterday amid concern about the strength of the economy and concern about Europe’s progress on resolving its debt problems.

Sharp slid 2.2 percent to 666 yen in Tokyo, while Nintendo Co., a maker of Wii game Consoles which made about 41 percent of its revenue from Europe, sank 1.8 percent to 11,810 yen in Osaka. Esprit slumped 6.9 percent to HK$10.58 in Hong Kong.
No Resolution

Luxembourg Prime Minister Jean-Claude Juncker, who chairs the group of euro-area finance ministers, indicated an Oct. 19 meeting of European leaders in Frankfurt failed to resolve differences ahead of a summit scheduled for this weekend. French Finance Minister Francois Baroin said that Europe’s temporary bailout fund would be best enhanced with help from the European Central Bank, a position the ECB and German government continue to oppose.

The disagreements among policy makers came as banks lobbied against forced recapitalization and deeper writedowns on privately held Greek debt.

“We remain pretty nervous about Europe’s crisis because we have yet to see a concrete safety-net being established for the financial system,” said Mitsushige Akino, who oversees about $600 million in Tokyo at Ichiyoshi Investment Management Co. “Pessimism about Europe sets the tone for the market’s sentiment.”
‘Conditions Aren’t Fabulous’

The Fed’s Beige Book survey showed companies reported more doubt about the recovery even as the economy maintained its expansion last month.

U.S. economic “conditions aren’t fabulous,” said White Funds Management’s Gluskie. “They’re not going backward but they’re not dramatically improving. If it’s improving, it’s very slight, and at this stage that’s not enough to give investors huge confidence.”

BHP slid 2.1 percent to A$35.63 in Sydney. Jiangxi Copper Co., China’s No. 1 producer of the metal, fell 4.5 percent to HK$14.88 in Hong Kong. Noble Group Ltd., a Hong Kong-based commodities supplier, retreated 1.4 percent to S$1.41 in Singapore.

The Thomson Reuters/Jefferies CRB Index of raw materials fell 1.3 percent yesterday. Crude oil for November delivery dropped $2.23 to settle at $86.11 a barrel on the New York Mercantile Exchange. The London Metals Exchange Index, a measure of six metals, retreated 2.3 percent yesterday.

Newcrest Mining sank 5.3 percent to A$33.87 in Sydney. The Melbourne-based company said its gold output for the three months ended September fell to 587,296 ounces from 674,219 ounces a year earlier.

Nanya Technology Corp. (2408), a Taiwanese memory-chip maker, tumbled 6.3 percent to NT$3.60 after its third-quarter net loss widened to NT$12 billion ($398 million) from NT$2.27 billion a year earlier.

To contact the reporters on this story: Kana Nishizawa in Hong Kong at knishizawa5@bloomberg.net; Yoshiaki Nohara in Tokyo at ynohara1@bloomberg.net.

To contact the editor responsible for this story: Nick Gentle at ngentle2@bloomberg.net.
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