Asian Stocks Drop as U.S. Services Report Dims Recovery Hopes

Dec. 4 (Bloomberg) -- Asian stocks fell from a 15-month high, led by mining companies, after U.S. service industries unexpectedly shrank, raising concern the economic recovery is still fragile.

Rio Tinto Group, the world’s third-biggest mining company, dropped 2.4 percent in Sydney, as metal prices slid after a U.S. index of non-manufacturing businesses missed the median economist estimate. Mitsui Mining & Smelting Co., a non-ferrous metal producer, declined 1.3 percent in Tokyo. James Hardie Industries NV, the top seller of home siding in the U.S., slumped 4.1 percent, ending a four-day winning streak.

“The weak economic indicator in the world’s biggest economy should spur a sell-off,” said Hiroichi Nishi, an equities manager at Nikko Cordial Securities Inc. in Tokyo.

The MSCI Asia Pacific Index fell 0.4 percent to 121.19 as of 10:00 a.m. in Tokyo, after yesterday climbing to the highest level since Sept. 1, 2008. The gauge has advanced 6.5 percent this week, putting it on course for the steepest weekly gain since the period ended May 8. The index has rallied 72 percent from a more than five-year low on March 9 amid signs government stimulus measures are reviving global growth.

Japan’s Nikkei 225 Stock Average declined 0.4 percent. The nation’s government will report slower economic growth for the July-September quarter than the 4.8 percent estimated previously when it announces revised figures on Dec. 9, the Nikkei newspaper said, without saying where it got the information.

Japan Growth

Australia’s S&P/ASX 200 Index fell 1.2 percent, while New Zealand’s NZX 50 Index retreated 0.3 percent in Wellington. South Korea’s Kospi Index was little changed.

In New York, the Standard & Poor’s 500 Index fell for the first time in four days yesterday, losing 0.8 percent. The Institute for Supply Management’s index of businesses that make up almost 90 percent of the U.S. economy sank to 48.7 in November, compared with a median estimate of 51.5 by 71 economists. Fifty is the dividing line between expansion and contraction.

James Hardie, which gets more than three-quarters of its revenue from North America, sank 4.1 percent to A$8.15, the biggest decline on the Asian benchmark index. Its shares rose 3.2 percent yesterday after the Federal Reserve said the U.S. economy had improved.

Metals Decline

Rio dropped 2.4 percent to A$71.74. The London Metal Exchange Index, a measure of six metals including copper and zinc, dropped 1 percent yesterday, breaking a three-day winning streak. BHP Billiton Ltd., the world’s largest mining company, lost 1.7 percent to A$41.76. In Tokyo, Mitsui Mining declined 1.3 percent to 232 yen.

The MSCI Asia Pacific Index’s rally from its March low has outpaced gains of 63 percent by the S&P 500 and 56 percent for Europe’s Dow Jones Stoxx 600 Index. Stocks in the benchmark are valued at 22 times estimated earnings, compared with 17 times for the S&P and 16 times for the Stoxx.

Takefuji Corp., a Japanese consumer lender, plunged 10 percent to 382 yen. The company is limiting loans because it has difficulty finding funds, the Asahi newspaper said, citing a company executive it didn’t identify. Mitsui Fudosan Co., a Japanese property developer, dropped 0.9 percent to 1,583 yen after having its rating cut to “underperform” from “outperform” at Mizuho Securities Co.