June 20 (Bloomberg) -- Asian stocks slid for a second day after a Federal Reserve policy maker fanned concern U.S. borrowing costs will keep rising. Toyota Motor Corp. led declines by companies that count on U.S. sales.

BHP Billiton and Sumitomo Metal Mining Co. fell as copper and zinc dropped because higher interest rates would slow demand for raw materials. Stock indexes in South Korea, Taiwan, Singapore, Thailand, India, Sri Lanka and the Philippines slumped 1.7 percent or more.

``Concerns that higher interest rates will hurt consumer spending in the U.S. are not going to go away any time soon,'' said Park Jae Hoon, who helps oversee about $800 million at Tong Yang Investment Trust Management Co. in Seoul.

The Morgan Stanley Capital International Asia-Pacific Index, a measure of 14 markets, dropped 1.2 percent to 119.28 as of 7:30 p.m. in Tokyo. The measure fell 1.1 percent yesterday. Japan's Nikkei 225 Stock Average slid 1.4 percent to 14,648.41.

The MSCI Emerging Markets Index slid 1.5 percent. Markets across the region fell, except in China, Malaysia and Pakistan. Taiwan's Taiex index tumbled 3.3 percent, Asia's biggest loser.

PCCW Ltd. surged on reports Sydney-based Macquarie Bank Ltd. offered the Hong Kong company about HK$40 billion ($5.15 billion) for all of its telecommunications and media assets.

Stocks in the U.S. fell yesterday, erasing this year's gain by the Standard & Poor's 500 Index. Fed Bank of Atlanta President Jack Guynn said that inflation figures were ``bothersome,'' reiterating his own remarks and those of fellow central bank policy makers earlier this month.

Hyundai Motor, TDK

The comments helped drag the MSCI index lower for a second day and deepened concern that consumer demand may weaken in Asia's biggest export market as central banks raise interest rates to keep inflation at bay.

Meanwhile, an index of U.S. builders' confidence reached an 11-year low, foreshadowing housing reports this week that economists expect to show further weakness.

Toyota Motor, the world's largest automaker by value, fell 1 percent to 5,780 yen. Toyota had 60 percent of its sales outside Japan last fiscal year. Hyundai Motor Co., South Korea's biggest automaker, dropped 5.4 percent to 74,300 won. The U.S. accounted for 29 percent of Hyundai's overseas sales last year.

TDK Corp., Japan's largest maker of magnetic heads for hard disk drives, fell 2.5 percent to 8,430 yen. The company gets almost two-thirds of its sales from abroad. Hon Hai Precision Industry Co., Taiwan's largest electronics exporter, tumbled 6.9 percent to NT$190.

Housing Slowdown

The Fed may raise interest rates for a 17th straight time next week, following the European Central Bank and counterparts in South Korea, Turkey, South Africa and Switzerland that have already boosted rates this month.

Interest-rate futures show traders are certain of a rate increase this month to 5.25 percent, while the odds of another quarter-point move in August rose to 70 percent, up from 67 percent yesterday and no chance two weeks ago.

Samsung Electronics Co., South Korea's largest exporter, lost 1.4 percent to 556,000 won. The company accounts for about 10 percent of South Korea's exports. James Hardie Industries NV, the biggest supplier of home siding in the U.S., fell 2 percent to A$7.79.

The U.S. National Association of Home Builders/Wells Fargo's index of builder confidence declined to the lowest since April 1995 due to higher mortgage rates. The index hasn't increased for the past eight months, the longest such period since 1994.

BHP, Korea Zinc

``There is increased concern that the U.S. economy might be slowing at a faster pace than we had expected,'' said Masaki Iso, who oversees $7.3 billion as head of Japanese equities at Yasuda Asset Management Co. in Tokyo.

Commodity suppliers dropped along with metals prices on speculation higher rates will reduce global demand. BHP, the world's biggest mining company, slid 2.4 percent to A$26.16. BHP has tumbled 18 percent from its record high on May 11 on concern higher rates may damp demand.

Sumitomo Metal Mining Co., Japan's second-largest copper smelter, slipped 4.5 percent to 1,253 yen. Korea Zinc Co., the world's biggest zinc smelter by production, dropped 6.9 percent to 61,900 won.

A measure of six metals traded on the London Metal Exchange, including copper and zinc, slid 2.8 percent yesterday. Copper fell 2.9 percent, aluminum dropped 3.3 percent, nickel lost 2 percent and zinc declined 2.8 percent. In New York, copper sank 4.1 percent.

`Global Picture'

``The selling has been driven by the global picture in the last few weeks and we'll probably have to wait until the U.S. interest rate decision has been made later this month before we see any end in sight,'' said Jamie Spiteri, head dealer at Shaw Stockbroking Ltd. in Sydney.

PCCW, Hong Kong's largest phone company, jumped 8.3 percent to HK$5.20. The Australian investment bank's buyout arm is in talks with PCCW to buy its fixed-line network, Sunday Communications Ltd. and broadband television business, Hong Kong's South China Morning Post newspaper said, citing people it didn't identify.

PCCW said in a statement late yesterday that it's in talks to sell all telecommunications and media assets, without identifying the potential buyer. Stephen Yan, a Sydney-based spokesman for Macquarie, Australia's biggest investment bank, declined to comment.

BHP Billiton (BHP AU)
Hyundai Motor Co. (005380 KS)
Hon Hai Precision Industry Co. (2317 TT)
James Hardie Industries NV (JHX AU)
Korea Zinc Co. (010130 KS)
PCCW Ltd. (8 HK)
Sumitomo Metal Mining Co. (5713 JP)
Toyota Motor Corp. (7203 JP)
TDK Corp. (6762 JP)
Samsung Electronics Co. (005930 KS)
Sumitomo Metal Mining Co. (5713 JP)

To contact the reporter for this story: Michael Tsang in Tokyo at mtsang1@bloomberg.net.

Last Updated: June 20, 2006 06:33 EDT