Aug. 15 (Bloomberg) -- Asian stocks slumped to a three-month low, led by Mitsubishi UFJ Financial Group Inc. and Sumitomo Mitsui Financial Group Inc., after the banks reported losses on investments related to U.S. subprime loans.

Mitsubishi UFJ and Sumitomo Mitsui, two of Japan's biggest lenders, slid to two-year lows. Toyota Motor Corp. and Westfield Group, which has 59 shopping malls in the U.S., dropped after Wal-Mart Stores Inc. cut its profit forecast, adding to evidence consumer spending is cooling in the world's biggest economy.

``The bearish camp that looks at this as a trigger for a real economic downturn seems to be growing,'' said Thue Isen, who manages about $1 billion in Asian equities at Bankinvest Group in Singapore. ``Risk has been re-packaged and traded between banks over the past few years and that makes it difficult for investors to have a good view on who has exposure.''

BHP Billiton Ltd., the world's largest mining company, fell to a nine-week low after metals prices declined.

The Morgan Stanley Capital International Asia-Pacific Index lost 2.3 percent to 145.89 at 6:19 p.m. in Tokyo, set for the lowest close since May 1. About 20 stocks fell for each that rose. The MSCI Asia-Pacific Financials Index slumped 3.2 percent, the biggest decline among the measure's 10 industry groups.

Japan's Nikkei 225 Stock Average slid 2.2 percent, halting a two-day advance. Matsushita Electric Industrial Co. slumped to a 22-month low after Nokia Oyj offered to replace up to 46 million mobile-phone batteries produced by the company on concern they will overheat. Sony Corp. led Japanese exporters lower as the yen strengthened against the dollar and the euro.

Consumer Confidence

Indonesia's Jakarta Composite index slumped 6.4 percent, the most in more than three years, as investors cut holdings of riskier assets such as emerging-market stocks.

Australia's S&P/ASX 200 Index slid 3 percent to a five-month low after a report showed consumer confidence tumbled the most in nine months, and Basis Capital Fund Management Ltd. said losses in one of its funds may exceed 80 percent. Trading in India and South Korea is suspended today for holidays.

In the U.S., Standard & Poor's 500 futures dropped 0.4 percent today. The S&P 500 Index slipped 1.8 percent yesterday, trimming this year's rise to 0.6 percent. In Europe, the Dow Jones Stoxx 600 Index fell 1.2 percent. More than $3.3 trillion has been wiped off the value of stocks worldwide on concern losses tied to U.S. subprime, or higher risk, home loans will fuel a credit crunch, damp spending and slow economic growth.

Negative Sentiment

Mitsubishi UFJ, Japan's largest bank, slumped 5.3 percent to 1.08 million yen, a two-year low. Sumitomo Mitsui, the third biggest, lost 5.9 percent to 920,000 yen, its lowest since September 2005.

Mitsubishi UFJ had unrealized losses of about 5 billion yen ($42.6 million) on investments related to U.S. subprime loans as of the end of July, the lender said. Sumitomo Mitsui said it recorded ``several billion yen'' of losses in the three months to June 30, after selling about 350 billion yen in U.S. mortgage- backed securities, including some backed by subprime loans.

``It is not the kind of loss that hurts their earnings significantly,'' said Yasuhiko Hirakawa, who helps manage the equivalent of $80 billion at DLIBJ Asset Management Co. in Tokyo. ``It's the negative sentiment over the global financial market that's pushing Japanese bank shares lower.''

Sydney-based hedge fund Basis Capital has been unable to ``accurately estimate'' the net asset value of units in its Yield Fund because of ``further deterioration of market conditions,'' its said today in a letter sent to investors and obtained by Bloomberg News. Goldman Sachs Group Inc. waived the management fee for new investors in its Global Equity Opportunities hedge fund, according to a person with direct knowledge of the terms.

Correction Territory

Macquarie Bank Ltd., Australia's biggest securities company, dropped 5.1 percent to A$66.68. Its shares have slumped 19 percent since its Macquarie Fortress Investments Ltd. unit, which had $873 million in two high-yielding funds, said on July 31 it was forced to sell assets to avoid breaching loan agreements.

Rams Home Loans Group Ltd., a Sydney-based mortgage lender, slid 4.3 percent to A$1.35. The company tumbled 19 percent yesterday after saying ``unprecedented disruptions'' in credit markets may reduce its profit, signaling concern subprime mortgage losses will spread to other parts of the economy.

``We're pretty much in correction territory,'' said Jason Teh, who helps manage about $6.5 billion at Investors Mutual Ltd. in Sydney. ``What scares people with the global liquidity crunch in credit markets is that if companies can't raise money to expand, then there's a flow-on effect for the economy.''

Philippine Long Distance Telephone Co., the country's biggest company by market value, lost 4.5 percent to 2,465 pesos. PT Telekomunikasi Indonesia, the nation's largest company by value, slipped 6.5 percent to 10,150 rupiah, its biggest loss since May 2004.

Toyota, Westfield

Toyota, which outsold General Motors Corp. worldwide in the first six months of the year, fell 3 percent to 6,850 yen. Westfield, the world's largest shopping center owner, lost 2.6 percent to A$18.69 in Australia.

Wal-Mart, the world's largest retailer, tumbled 5.1 percent, the most since 2002, after Chief Executive H. Lee Scott said Americans face ``difficult pressure economically.''

Full-year profit will be as much as $3.13 a share, 10 cents lower than the company's initial forecast, after sales of apparel and home goods faltered, Wal-Mart said. It also reported second- quarter profit that rose less than analysts predicted.

Home Depot Inc. Chief Executive Officer Frank Blake said the U.S. home-improvement market will ``remain soft'' due to slowing home sales and declining house prices. The company reiterated a prediction for per-share profit to fall as much as 15 percent.

Matsushita, the world's largest maker of consumer electronics, slumped 5 percent to 2,015 yen, the lowest since October 2005. Nokia may replace as many as 46 million of the Japanese company's mobile-phone batteries after about 100 overheated. Matsushita's operating profit may take a 3 percent hit this year as a result, according to Credit Suisse Group.

Metals, Yen

BHP Billiton slid 5.3 percent to A$33.20, the lowest since June 13. Rio Tinto, the world's third-biggest mining company, fell 3.5 percent to A$83. Sumitomo Metal Mining Co., Japan's No. 2 copper smelter and largest nickel producer, declined 5.8 percent to 2,360 yen.

A measure of six metals traded on the London Metal Exchange fell 1.7 percent yesterday to the lowest since March 14. Copper lost 1.9 percent, nickel fell 0.6 percent, and zinc dropped 1.8 percent.

The yen recently strengthened to 116.79 against the dollar from 117.88 at the market close in Tokyo yesterday. The Japanese currency rose as high as 157.21 per euro from 160.52. A stronger yen reduces the value of Japanese export sales when converted back into local currency.

Sony, the maker of the Vaio computer and PlayStation game console, slid 2.7 percent to 5,520 yen. Canon Inc., the world's biggest digital-camera maker, lost 2.3 percent to 6,040 yen.

Meanwhile, shares of James Hardie Industries NV, the biggest seller of home siding in the U.S., climbed 2.3 percent to A$7.67, in Australia after it reported a 9 percent increase in first- quarter earnings. The shares rose as much as 7.1 percent earlier.

The company said it is ``comfortable with the bottom end'' of analyst estimates for annual profit of between $187 million and $233 million. It also plans to buy back 10 percent of its stock.

BHP Billiton Ltd. (BHP AU)
Canon Inc. (7751 JT)
James Hardie Industries NV (JHX AU)
Macquarie Bank Ltd. (MBL AU)
Matsushita Electric Industrial Co. (6752 JT)
Mitsubishi UFJ Financial Group Inc. (8306 JT)
Philippine Long Distance Telephone Co. (TEL PM)
PT Telekomunikasi Indonesia (TLKM IJ)
Rams Home Loans Group Ltd. (RHG AU)
Rio Tinto Ltd. (RIO AU)
Sony Corp. (6758 JT)
Sumitomo Metal Mining Co. (5713 JT)
Sumitomo Mitsui Financial Group Inc. (8316 JT)
Toyota Motor Corp. (7203 JT)
Westfield Group (WDC AU)

To contact the reporter for this story: Makiko Suzuki in Tokyo at msuzuki13@bloomberg.net; Chen Shiyin in Singapore at schen37@bloomberg.net

Last Updated: August 15, 2007 05:20 EDT