Nov. 12 (Bloomberg) -- Asian stocks tumbled, sending a regional index to its biggest drop in three months, on speculation HSBC Holdings Plc and other banks will report increased losses related to U.S. subprime mortgages.

Japan's Nintendo Co., which gets two-thirds of sales abroad, led declines among exporters after the dollar slumped against the yen. PetroChina Co. and Woodside Petroleum Ltd. fell after the price of crude oil dropped. HSBC slumped 2.8 percent after the Daily Telegraph newspaper said it may announce $1 billion of bad debts and Morgan Stanley cut its rating.

``Investors have to reevaluate what shares are worth as the U.S. starts pulling down economies globally,'' said Takashi Kamiya, who helps oversee $16 billion at T&D Asset Management Co. in Tokyo. ``The continued weakness of the dollar is going to cause substantial damage to exporters' earnings.''

The Morgan Stanley Capital International Asia Pacific Index fell 2.9 percent to 158.11 as of 7:03 p.m. in Tokyo, set for its biggest loss since Aug. 17 and the lowest close since Sept. 24. Benchmarks slid in the region, except for Pakistan and Sri Lanka.

Hong Kong's Hang Seng Index led losses after Credit Suisse Group said China will ``delay'' a plan to allow mainland citizens to buy the city's shares. China's CSI 300 Index dropped after the government ordered banks to increase their reserves to cool economic growth. Japan's Topix index sank to a two-year low.

Nintendo, maker of the Wii game console, fell 4.2 percent to 58,800 yen. It loses 3 billion yen ($27 million) in profit from operations for every 1 yen that the currency strengthens against the dollar. Honda Motor Co., Japan's No. 2 automaker, slid 3.6 percent to 3,760 yen. North America accounted for more than half of Honda's sales in the 12 months ended March 2007.

Dollar Weakness

The dollar fell to as low as 109.85 against the yen today, a level not seen since May 2006. A weaker U.S. currency lowers the value of exporters' dollar-denominated sales when converted into local currency. The U.S. is Japan's biggest overseas market.

PetroChina, the nation's largest oil producer, slumped 7.3 percent to HK$14.96. Woodside Petroleum lost 5.9 percent to A$52.09. Oil for December delivery fell as much as 1.5 percent to $94.86 a barrel in after-hours electronic trading on the New York Mercantile Exchange. Futures were recently at $95.61.

U.S. stocks slumped on Nov. 9 after Wachovia Corp., the fourth-biggest U.S. bank, said it may have lost as much as $1.7 billion this quarter on mortgage-related investments. Bank of America Corp. and JPMorgan Chase & Co. the No. 2 and No. 3 U.S. lenders, reported that their fourth-quarter results may be hurt by tightening credit markets.

`Risk Averse'

HSBC, Europe's biggest bank by market value, slumped 2.8 percent to HK$137.10 in Hong Kong, its biggest decline since Oct. 22. Morgan Stanley cut the stock's rating to ``equal-weight'' from ``overweight,'' citing possible declines and losses at its U.S. business.

The lender will reveal the value of subprime-related losses when it announces third-quarter results for its U.S. business this week, the Daily Telegraph said yesterday on its Web site, without citing the source of its information. Gareth Hewett, a Hong Kong-based spokesman for HSBC, declined to comment on the report yesterday.

Mitsubishi UFJ Financial Group Inc., Japan's No. 1 publicly traded bank, lost 1.9 percent to 903 yen. DBS Group Holdings Ltd., Singapore's largest lender, fell 3.4 percent to S$19.80.

``Investors are increasingly risk-averse,'' said Nicole Sze, Singapore-based investment analyst at Bank Julius Baer & Co., which manages $350 billion in assets worldwide. ``Nobody knows the full extent of the losses.''

`Negative Expectations'

Hong Kong's Hang Seng lost 3.9 percent to 27,665.73, its lowest close since Oct. 4. Credit Suisse said today in a report that a plan by China to allow some of its citizens to invest directly in Hong Kong was postponed until at least the second quarter of 2008.

The proposal, made on Aug. 20 without a timetable, triggered a flood of investment in Hong Kong, fueling a rally in the Hang Seng and in the Hang Seng China Enterprises Index, a measure of mainland Chinese companies' shares traded in the city.

``No one knows for how long the plan will be delayed and there are all sorts of rumors,'' said Jacky Choi, who helps manage more than $6 billion at Value Partners Ltd. in Hong Kong. ``What people have now are negative expectations.''

China Mobile Ltd., the world's largest wireless-phone carrier by users, dropped 5.6 percent to HK$129.40. Hong Kong Exchanges & Clearing Ltd., operator of the city's stock exchange, dropped 6.7 percent to HK$225.40.

Rio Tinto

China's CSI 300 sank 1.2 percent to 4,978.25, closing below 5,000 for the first time since Aug. 21. Industrial & Commercial Bank of China Ltd., the world's largest lender by market value, dropped 2.2 percent to 8.17 yuan. Bank of China Ltd., the country's No. 2 bank, lost 1.8 percent to 7.06 yuan.

The People's Bank of China ordered banks on Nov. 10 to put aside 13.5 percent of deposits from 13 percent, removing about 190 billion yuan ($26 billion) from the financial system. That's the highest since at least 1987, Bloomberg data shows.

Elsewhere, Rio Tinto Group, the mining company that rebuffed a takeover approach from BHP Billiton Ltd., jumped 6.7 percent to a record A$139.72 on speculation BHP will make a higher bid in what may become the world's largest takeover. BHP's shares fell 1.8 percent to A$41.70.

Bank of China Ltd. (601988 CH)
BHP Billiton Ltd. (BHP AU)
China Mobile Ltd. (941 HK)
DBS Group Holdings Ltd. (DBS SP)
Honda Motor Co. (7267 JT)
Hong Kong Exchanges & Clearing Ltd. (388 HK)
HSBC Holdings Plc (5 HK)
Industrial & Commercial Bank of China Ltd. (601398 CH)
Mitsubishi UFJ Financial Group Inc. (8306 JT)
Mizuho Financial Group Inc. (8411 JT)
Nintendo Co. (7974 JO)
PetroChina Co. (857 HK)
Rio Tinto Group (RIO AU)
Woodside Petroleum Ltd. (WPL AU)

To contact the reporter for this story: Chen Shiyin in Singapore at schen37@bloomberg.net; Patrick Rial in Tokyo at prial@bloomberg.net.

Last Updated: November 12, 2007 05:05 EST