Nov. 17 (Bloomberg) -- Asian stocks retreated, led by financial companies and commodity producers, as recession in Japan and Hong Kong and declining oil prices heightened concern a global economic slowdown is deepening.

Mitsubishi Estate Co., Japan's largest developer by market value, sank 5.4 percent after the Nikkei newspaper said Tokyo office rents retreated for the first time in six years. Hong Kong Exchanges & Clearing Ltd., which runs the city's equities market, slid 7.2 percent after Morgan Stanley cut its share price target. BHP Billiton Ltd. sank 4.9 percent in Sydney after China National Petroleum Corp., China's largest crude producer, said oil demand contracted ``sharply.''

``The concern is how deep and protracted this synchronized global recession is going to be,'' said Daphne Roth, the Singapore-based head of equity research at ABN Amro Private Bank, which manages about $30 billion of Asian assets.

The MSCI Asia Pacific Index lost 0.7 percent to 82.49 at 7:24 p.m. in Tokyo, after swinging between gains and losses at least seven times. About than five stocks fell for every four that gained.

Shares on the gauge are valued at 10 times trailing earnings and fell to 8.2 times last month, the lowest level since at least 1995, Bloomberg data shows. MSCI's Asian index has lost 48 percent this year as the collapse of the U.S. mortgage market sparked $960 billion in losses and writedowns at financial companies and now threatens a global economic recession.

On Nov. 15, leaders from the biggest developed and emerging nations urged a ``broader policy response,'' citing the potential for additional interest-rate cuts and fiscal stimulus. The Group of 20 nations set a March deadline for recommendations on strengthening accounting standards, derivatives markets and oversight of hedge funds and debt-rating companies.

Japan, Hong Kong

Japan's economy, the world's second largest, slipped into recession for the first time since 2001 as companies cut back spending, the Cabinet Office said today. Hong Kong's economy entered its first recession since the outbreak of a deadly epidemic in 2003 as the global financial crisis cut exports and spending cooled, the government said on Nov. 14.

Australia's S&P/ASX 200 Index slumped 2.5 percent to its lowest level since September 2004. Babcock & Brown Ltd., which is down 98 percent this year, fell after saying it may lose $41 million on a venture with GPT Group. Limiting declines, Coca-Cola Amatil Ltd. rose the most since August 2000 after Lion Nathan Ltd. offered to buy the company for A$7.6 billion ($4.9 billion).

Japan's Nikkei 225 Stock Average gained 0.7 percent to 8,522.58, as Daiichi Sankyo Co. and other drugmakers attracted investors seeking companies whose earnings will be shielded from a slowdown.

China's Airlines

China's CSI 300 Index added 2.2 percent, led by China Eastern Airlines Corp., after a newspaper reported the government will inject cash into airlines' parent companies.

Mitsubishi Estate dropped 5.4 percent to 1,396 yen. Mitsui Fudosan Co., the biggest Japanese property developer by revenue, slipped 5.2 percent to 1,383 yen. Building owners are lowering rents for new office buildings in Tokyo as an economic slowdown prevents tenants from expanding or moving to new offices, Nikkei reported, citing its own survey.

Daiichi Sankyo, Japan's third-largest drugmaker, added 5.4 percent to 1,964 yen. Osaka Gas Co., the nation's No. 2 distributor of the fuel, climbed 5.4 percent to 374 yen.

``Looking past companies with low earnings hopes and those that depend on deteriorating overseas demand, the remaining choice is defensive stocks,'' said Mitsushige Akino, who oversees about $468 million at Tokyo-based Ichiyoshi Investment Management Co.

Hong Kong Trading

Hong Kong Exchanges slid 7.6 percent to HK$60.55, the lowest level since October 2006, after Morgan Stanley reduced its share target price by 49 percent to HK$38. The average daily value of shares traded could drop to HK$$47 billion ($6 billion) in 2009, analysts Anil Agarwal and Daniel Shum said in a report today.

The value of shares that changed hands on the exchange totaled HK$39.8 billion today, the lowest for a full day of trade since March 20, 2007, and less than this year's daily average of HK$75.8 billion.

BHP, Australia's largest oil producer, slid 4.9 percent to A$25.10. Inpex Corp., Japan's biggest oil explorer, fell 3.4 percent to 481,000 yen.

Crude oil dropped as much as 2.5 percent to $55.60 a barrel in after-hours trading, after falling 2.1 percent to close at $57.04 in New York on Nov. 14. China National Petroleum, the biggest producer in the world's second-largest oil consumer, said demand has fallen since September amid the global credit crisis.

China's slowing economy was cited by BHP when it said Nov. 14 that customers requested a deferral of iron ore shipments equal to 5 percent of its budget for 2008.

Babcock Loan

Babcock, the worst-performing stock on the MSCI Asian index this year, tumbled 15 percent to 41 Australian cents. GPT, an Australian real estate investment trust, dropped 8.9 percent to A$1.02. Babcock said Wachovia Corp. may recall a $112 million loan after its joint venture with GPT failed to pay more collateral.

Also in Sydney, James Hardie Industries NV, the biggest seller of home siding in the U.S., retreated 7.4 percent to A$4.40 after second-quarter earnings dropped 26 percent and the company said it won't pay a first-half dividend.

Coca-Cola Amatil jumped 13 percent to A$9.31. Lion Nathan, Australia's second-largest brewer, offered to buy the bottler of Coke for A$7.6 billion ($4.9 billion) in cash and stock to create the nation's biggest beverages group, Amatil said.

In Shanghai, China Eastern, the country's third-largest carrier, jumped by the 10 percent daily limit to 3.85 yuan. China Southern Airlines Co., Asia's biggest carrier by number of passengers, advanced 12 percent to HK$1.22 in Hong Kong. The companies' parents will each receive a 3 billion yuan ($439 million) capital injection this year from the government, the Oriental Morning Post newspaper said today from Shanghai.

To contact the reporters for this story: Kyung Bok Cho in Seoul at kcho7@bloomberg.net; Chua Kong Ho in Shanghai at kchua6@bloomberg.net.

Last Updated: November 17, 2008 05:29 EST