Dec. 16 (Bloomberg) -- Asian stocks fell, led by commodity producers and consumer electronics makers, on concern the deepening global recession will stifle earnings growth.

Macarthur Coal Ltd. plunged 22 percent after slashing its profit forecast and suspending its dividend on a slump in demand. JFE Holdings Inc., Japan’s No. 2 steelmaker, lost 5.9 percent after the Nikkei newspaper said Toyota Motor Corp. will ask for lower steel prices. Sony Corp. slid 5.9 percent as brokerages reduced their recommendations.

“Much hangs on how long the current economic downturn will last,” said Naoki Fujiwara, chief fund manager at Tokyo-based Shinkin Asset Management Co., which manages the equivalent of $6.1 billion. “When materials become cheaper, steelmakers are forced to make price cuts. It’s the nature of the industry and negative for earnings.”

The MSCI Asia Pacific Index declined 0.9 percent to 87.31 as of 6:06 p.m. in Tokyo. About five stocks fell for every four that gained, while eight out of the 10 industry groups dropped.

The first simultaneous recessions by Japan, the U.S. and Europe since World War II has dragged the Asian gauge down 45 percent this year, the worst annual decline in its 20-year history. Shares in the index now trade to an average price of 5 times cash flow, half the level at the start of the year.

Japan’s Nikkei 225 Stock Average dropped 1.1 percent to 8,568.02. Daiwa Securities Group Inc., the country’s second- largest brokerage, slumped 5.5 percent after saying it may raise as much as $1.1 billion in new capital.

Global Losses

Financial companies worldwide have raised $918 billion as the collapse of the U.S. mortgage market and the global equity rout sparked almost $1 trillion in losses and writedowns.

Chinese stocks gained, led by a 7.3 percent advance in Poly Real Estate Group Co., after the country’s central bank Governor Zhou Xiaochuan said he may cut interest rates this month.

A decline in U.S. manufacturing drove the S&P 500 Index down 1.3 percent yesterday, while the New York Federal Reserve’s regional economic index fell to the lowest level since the tally began in 2001. General Motors Corp. rose 3.6 percent, the most on the Dow Jones Industrial Average, after President George W. Bush said his administration is considering bailing out automakers.

Macarthur Coal, the world’s biggest exporter of pulverized coal that’s used in steelmaking, plunged a record 22 percent to A$2.70 as it cut its profit forecast for the six months to Dec. 31 in half. The company also suspended its dividend, citing a “sudden and unprecedented” drop in coal sales.

Fortescue Metals Group Ltd., which mines iron ore used in steel production, retreated 10 percent to A$2.36 after Morgan Stanley said the company may post a first-half loss as deliveries miss forecasts.

Production Cuts

Steelmakers and mining companies across the world are cutting jobs and production as slowing economies erode demand for the metal from carmakers and builders. Declining auto sales have helped push GM and Chrysler LLC to the brink of bankruptcy, with both companies saying they need aid this month to avoid running out of money for operations.

Slumping demand will force Japan’s Toyota to ask for a 30 percent reduction in steel sheet prices for the year starting in April, the Nikkei newspaper said. The world’s second-largest automaker said yesterday it has indefinitely delayed the opening of a Mississippi plant. The stock lost 0.7 percent to 3,010 yen.

JFE tumbled 5.9 percent to 2,400 yen. Nippon Steel Corp., the world’s second-largest steelmaker by output, fell 4.4 percent to 283 yen. Hitachi Metals Ltd. slid 15 percent to 497 yen after the maker of specialty steel and metal products lowered its profit forecast by 83 percent, citing weak demand.

Developers Gain

Poly Real Estate, China’s second-largest listed property developer, rose 7.3 percent to 18.34 yuan. China Vanke Co., the largest, climbed 5.3 percent to 7.58 yuan.

China’s central bank governor said he sees “pressure” to cut interest rates from now until the beginning of next year as growth slows amid a collapse in exports. The central bank lowered its key lending rate last month by the most in 11 years. Cheaper borrowing costs may spur property sales.

China Overseas Land & Investment Ltd., a developer controlled by the nation’s construction ministry, jumped 4.5 percent to HK$11.10, the steepest rally on Hong Kong’s Hang Seng Index.

In Japan, Daiwa declined 5.5 percent to 468 yen. The nation’s second-largest brokerage said it may raise as much as 100 billion yen ($1.10 billion) to boost capital after the company swung to a loss last quarter.

Ratings Downgrades

Consumer electronics makers fell as analysts cut their ratings. Sony, the maker of Bravia liquid-crystal display televisions, lost 5.9 percent to 1,825 yen. Samsung Electronics Co., the world’s biggest computer-memory maker, dropped 3.2 percent to 457,000 won.

Sony was lowered to “underperform” from “neutral” by Koya Tabata at Credit Suisse, citing plunging prices for televisions and a glut of lithium batteries. Samsung was reduced to “neutral” at JPMorgan Chase & Co. because of declining demand, according to a report.

China Cosco Holdings Co., the world’s largest operator of dry-bulk ships, slid 7.1 percent to 8.60 yuan after saying it may lose 3.95 billion yuan ($577 million) from forward freight agreements.

Telstra Corp., Australia’s largest phone company, lost 3 percent to A$3.54, its lowest since September 2006. Goldman Sachs Group Inc. and JPMorgan cut their share-price estimates on the stock after the government rejected the company’s bid to build a nationwide high-speed Internet network.

Morinaga & Co., a Japanese maker of cocoa, ice cream and chocolate snacks, rose 6.3 percent to 203 yen after the Nikkei newspaper reported it may merge with Morinaga Milk Industry Co. Both companies denied they were in talks. Morinaga Milk retreated 1.2 percent to 343 yen.

To contact the reporter for this story: Patrick Rial in Tokyo at prial@bloomberg.net;

Last Updated: December 16, 2008 05:23 EST