March 13 (Bloomberg) -- Asian stocks fell the most in almost a week on concern widening credit losses and a slump in the dollar will dent earnings among the region's banks and exporters.

Commonwealth Bank of Australia led declines among banks after a Carlyle Group fund failed to reorganize its debt and Shinsei Bank Ltd. cut its profit forecast. Toyota Motor Corp., which gets 58 percent of its sales outside of Asia, dropped as the dollar fell below 100 yen for the first time since 1995.

``There's fear in the markets,'' said David Ng, who helps manage about $1 billion at Hwang-DBS Asset Management Sdn. in Kuala Lumpur. ``It's a case of when it rains, it pours, and it's pouring. What the market needs to know is how many more Carlyles are there.''

The MSCI Asia Pacific Index fell 2.4 percent to 137.23 as of 7:29 p.m. in Tokyo, the biggest drop since March 7. The measure is down 13 percent this year, on fears the U.S. will enter a recession amid increasing losses linked to investments in the country's mortgage industry. All 10 of the gauge's industry groups declined, with nine stocks dropping for each one that climbed.

Japan's Nikkei 225 Stock Average fell 3.3 percent to 12,433.44, the lowest since Aug. 31, 2005. Hong Kong's Hang Seng Index slumped 4.8 percent, the most in five weeks, after an influenza outbreak triggered the closure of primary schools and kindergartens. Most markets in Asia declined.

Carlyle Fund

Qantas Airways Ltd. fell as crude oil rose above $110 a barrel, raising concern fuel costs will increase. Amada Corp., a Japanese machine-tool maker, rose the most in three weeks on a report that the company will post a record profit.

The U.S. Standard & Poor's 500 Index lost 0.9 percent yesterday after banks including Merrill Lynch & Co. said a Federal Reserve plan to pour as much as $200 billion into the financial system may not eliminate gridlock in credit markets.

Financial firms have been battered by $188 billion in losses and writedowns related to a collapse in the subprime mortgage market. A Carlyle mortgage-bond fund today said it was unable to reach an agreement with lenders, who will take over all of its remaining assets.

Commonwealth Bank, Australia's second-largest bank, declined 5.6 percent to A$39.50, the most since Feb. 13. Mitsubishi UFJ Financial Group Inc., Japan's biggest publicly traded bank, tumbled 6.8 percent to 844 yen, the steepest drop since Dec. 13. DBS Group Holdings Ltd., Singapore's No.1 bank, dropped 2.5 percent to S$16.90.

Yen Strength

Shinsei Bank Ltd., the first Japanese bank to be acquired by overseas investors, dropped 5.2 percent to 400 yen, after cutting its profit forecast because of $100 million in fourth- quarter U.S. mortgage-related losses.

A gauge of financial shares on the MSCI Asia Pacific Index, the worst performer of the main benchmark's industry groups this year, dropped 3.6 percent. The regional gauge yesterday climbed the most in two weeks on the Fed's plan, which Merrill said may not be enough to solve the credit-market crisis.

The U.S. central bank has cut its key rate by 2.25 percentage points since Sept. 18 to 3 percent to bolster growth that slowed to 0.6 percent in the fourth quarter from 4.9 percent in the previous three months.

``The Fed prescriptions are like using cough syrup to cure pneumonia,'' said Leslie Phang, who helps oversee $275 billion at Schroders Plc as Singapore-based head of investments at its private clients unit. ``It's the wrong cure and it's too late.''

`Critical Point'

Toyota, Japan's biggest automaker, fell 3 percent to 5,250 yen as the weaker dollar threatened to erode the value of Japanese companies' dollar-denominated sales. The U.S. currency fell to 99.77 yen, the weakest since Nov. 9, 1995.

Honda Motor Co., the No. 2 carmaker, dropped 4.2 percent to 2,940 yen. Nintendo Co., which gets two-thirds of its sales outside Japan, declined 4.8 percent to 51,300 yen.

Qantas, Australia's largest airline, fell 4.2 percent to A$3.65, the lowest level since Sept. 18, 2006. Korean Air Lines Co., the biggest international air-cargo carrier, plunged 8.3 percent to 56,400 won.

Crude oil traded near a record $110.20 a barrel in New York. Jet fuel, the biggest expense for most Asian carriers, climbed 14 percent this year through yesterday, compared with a 15 percent gain in crude-oil prices.

``We may be approaching a critical point where cost-related problems start to emerge, especially for energy-dependent industries,'' said Lim Chang Gue, who oversees the equivalent of $2 billion at Samsung Investment Trust Management Co. in Seoul.

Amada gained 3.6 percent to 712 yen, the most since Feb. 21. The company's operating profit will rise 6 percent the next fiscal year, the Nikkei newspaper reported.

Influenza Outbreak

In Hong Kong, fears that an influenza outbreak will escalate helped send the Hang Seng Index to its first loss in four days. A severe acute respiratory syndrome epidemic in 2003 killed 299 people and crippled the city's economy.

Cathay Pacific Airways Ltd., the city's flag carrier, tumbled 4.5 percent to HK$15, on speculation tourist numbers will decline. Shangri-La Asia Ltd., Asia's largest luxury hotel operator, plunged 8.5 percent to HK$19.48, the biggest loss since Dec. 28, 2006.

China Railway Construction Corp., builder of more than half the nation's railroads, rose 12 percent to HK$12, the smallest gain in a Hong Kong trading debut since November. Its Shanghai- traded shares had the worst first-day gain for mainland initial sales since 2006.

To contact the reporters for this story: Chua Kong Ho in Shanghai on kchua6@bloomberg.net; Chan Tien Hin in Kuala Lumpur thchan@bloomberg.net.

Last Updated: March 13, 2008 06:31 EDT