Aug. 5 (Bloomberg) -- Asian stocks fell after crude oil approached $62 a barrel and investors bet the U.S. Federal Reserve will need more interest rate increases to stem inflation. Samsung Electronics Co. and Toyota Motor Corp. led declines.

``The exporters are feeling the pain because you've got the double effect of rising oil prices and U.S. interest rates quashing consumers' enthusiasm for spending,'' said Atul Lele, who helps manage about $675 million at White Funds Management in Sydney. ``The U.S. is driving Asian growth, so any hint of further rate hikes there is not so great for us here.''

The Morgan Stanley Capital International Asia-Pacific Index, which tracks more than 1,000 companies, lost 0.7 percent to 102.20 as of 12:15 p.m. in Tokyo. All of the index's 10 industry groups declined. The benchmark is set for its fourth straight weekly advance.

South Korea's Kospi index lost 2.2 percent, Asia's biggest loser. Other regional indexes also fell, except in China. Markets were shut in Taiwan because of a typhoon.

Japan's Nikkei 225 Stock Average dropped 0.4 percent to 11,841.08 on concern Prime Minister Junichiro Koizumi will call an election because of opposition within his own party to his plans to sell the nation's post office system.

In the U.S., the Dow Jones Industrial Average had its biggest drop in a month and the Standard & Poor's 500 Index retreated from a four-year high as oil prices rose and after retailers including Target Corp. and Nordstrom Inc. posted disappointing sales gains.

Samsung Electronics, South Korea's largest exporter, declined 2.3 percent to 553,000 won. The company accounts for about 10 percent of the nation's exports. Toyota, the world's biggest automaker by market value, lost 1.2 percent to 4,200 yen.

Risk

Oil for September delivery rose as much as 0.8 percent to $61.88 a barrel in after-hours electronic trading on the New York Mercantile Exchange. It recently traded at $61.65.

``Any further gain in the oil price is a risk for stocks,'' said Atsushi Osa, who owns shares of automakers among the $110 billion of assets he helps oversee at Sumitomo Mitsui Asset Management Co. in Tokyo. ``A gain above $65 a barrel and toward $70 a barrel will prompt people to review their economic outlooks.''

Honda Motor Co., Japan's third-largest automaker, dropped 1.6 percent to 5,720 yen. Honda had more than 75 percent of its sales in North America in 2004. Hyundai Motor Co., South Korea's biggest automaker, fell 1 percent to 69,900 won. Three out of every four cars Hyundai made in 2004 were sold outside South Korea.

Fed Watch

Barclays Capital boosted its forecast for how much the Fed will raise its interest-rate target this year to 4.25 percent from 4 percent, citing better-than-expected economic growth, according to a research report. The Fed has increased the rate nine times since June 2004 to 3.25 percent. U.S. policy makers will meet Aug. 9.

A government report later today may show that U.S. employers added 180,000 workers in July, the most in three months, according to economists surveyed by Bloomberg News. The jobless rate probably held at 5 percent, matching the lowest since September 2001, according to the survey of economists.

``What investors are concerned about with the U.S. nowadays is not whether economic growth is intact, but how much more the Fed will raise rates,'' said Soichiro Monji, who helps oversee about $28 billion as senior strategist at Daiwa SB Investments Ltd. in Tokyo.

Yue Yuen Industrial (Holdings) Ltd., the world's largest sports-shoes maker, slid 0.6 percent to HK$24.15. Chartered Semiconductor Manufacturing Ltd., Singapore's biggest chipmaker, fell 1.6 percent to S$1.26.

`Political Upheaval'

Japan's Nikkei days retreated from a 15-month high reached earlier this week on concern a rejection of the postal bill and a possible election may hamper efforts to boost economic growth in the world's second-largest economy.

Koizumi is credited with engineering Japan's first expansion in four years. Last year the economy grew 2.7 percent, the fastest pace since 1996. The prime minister says private companies will do a better job than bureaucrats at managing the 350 trillion yen ($3.1 trillion) assets of Japan Post, the world's largest savings bank.

``Political upheaval is the main reason behind the drop as we approach the postal bill voting,'' said Katsunori Hirai, a fund manager at Tokio Marine Asset Management Co. in Tokyo, which has $20 billion in assets under management. ``Foreign investors especially are becoming worried about weaker governmental leadership and possible uncertainties created by an election.''

To contact the reporter for this story: Stuart Kelly in Sydney skelly22@bloomberg.net

Last Updated: August 4, 2005 23:28 EDT