Aug. 15 (Bloomberg) -- Emerging-market shares and currencies fell, with Indonesian stocks tumbling the most in three years, after widening losses linked to U.S. subprime loans prompted investors to shun riskier assets.

``U.S. subprime losses have detonated a global financial markets disaster,'' said Vickie Hsieh, who helps oversees $1.4 billion at President Investment Trust Corp. in Taipei. ``Investors typically associate emerging markets with higher volatility and so unload those stocks whenever there is turbulence in financial markets.''

Morgan Stanley Capital International's Emerging Markets Index fell 2.4 percent to 1,014.01, its lowest close since June 8.

Brazilian mining company Cia. Vale do Rio Doce led the decline in Latin American shares. Hon Hai Precision Industry Co., the world's largest contract electronics manufacturer, and phone company PT Telekomunikasi Indonesia led Asian stocks lower. Turkiye Garanti Bankasi AS and Russia's OAO Sberbank led financial stocks lower in Europe.

The Indonesian rupiah dropped to a one-year low against the dollar and the Turkish lira was the weakest in two months against the U.S. currency. Brazil's currency weakened past the 2.0-per- dollar level for the first time in three months.

U.S.-based Sentinel Management Group Inc., which oversees $1.6 billion, yesterday joined other funds in freezing client withdrawals after saying credit-market turmoil made it impossible to trade. Mitsubishi UFJ Financial Group Inc., Japan's biggest lender, today reported unrealized losses of about 5 billion yen ($42.6 million) on investments related to U.S. subprime, or higher- risk, mortgages.

Cooling Economy

Exporter stocks such as Hon Hai Precision Industry Co. fell after Wal-Mart Stores Inc. and Home Depot Inc., the two largest U.S. retailers, said a housing slump will hurt profit, adding to evidence that demand is cooling in the world's biggest economy. Hon Hai dropped 3.7 percent to NT$262 in Taipei.

U.S. economic growth is expected to slow to an average 2.6 percent annual pace in the second half of the year, 0.2 percentage point less than economists forecast in July, according to a Bloomberg survey taken earlier this month.

Indonesia's Jakarta Composite Index plunged 6.4 percent, the biggest decline since May 2004, and the Philippine Stock Exchange Index slid 4.1 percent, the most in five months. Taiwan's Taiex index dropped to a two-month low as did Russia's ruble-denominated Micex Index. Turkey's ISE National 100 Index headed for its lowest close in six weeks.

Copper and nickel fell for a second day in London on concern the U.S. mortgage crisis will crimp demand for metals.

Peru's Southern Copper Corp. fell 6.5 percent to 89.68 pesos.

Telekomunikasi Indonesia, the country's largest phone company, dropped 6.5 percent to 10,150 rupiah, sliding the most in three years. Philippine Long Distance Telephone Co., the nation's biggest company, dropped 4.5 percent to 2,465 pesos.

Garanti Bankasi, a Turkish lender co-owned by General Electric Co., fell 5.4 percent to 7.8 liras, and Sberbank, Russia's biggest bank, sank 2.4 percent to $3.70.

`Unpredictable'

``Turbulence in the international markets is extremely strong and completely unpredictable in the very short term,'' said Emre Tezmen, head of Istanbul-based Tera Brokers.

The Indonesian rupiah fell 0.4 percent to 9,400 per dollar, the weakest since July 2006. The Philippine peso dropped 0.9 percent to 46.225, its lowest since July 11. The Taiwan dollar weakened past NT$33 for the first time in more than seven weeks.

Indonesia's central bank said today it has been ``intervening'' in the foreign-exchange market, buying rupiah to slow the decline in the currency. Overseas investors were net sellers of shares in both Indonesia and the Philippines today, official figures show.

``We've gone up a notch on risk aversion and investors are taking no chances and going into safer assets,'' said Jan Lambregts, head of Asia research at Rabobank International in Hong Kong. ``Asian currencies are falling from that spillover.''

Turkey's lira reached 1.3447 to the dollar, its lowest since June 13. South Africa's rand fell for a third day, losing as much as 1.8 percent to 7.4400 per dollar, a 4 1/2-month low.

The prices of Aluminum, lead, and tin also decreased.

``Western investors have suffered losses because of the subprime crisis and are now selling their emerging-market assets,'' said Eran Cohen, a fund manager, who helps oversee $3.6 billion at Migdal Capital Markets in Tel Aviv. ``They now want to be more conservative.''

To contact the reporter on this story: George Hsu in Taipei at georgehsu@bloomberg.net; Alexander Ragir in New York at aragir@bloomberg.com

Last Updated: August 15, 2007 17:45 EDT