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Asian Shares, Currencies Drop on Middle East, Japan Earthquake

Asian stocks fell, dragging the region’s benchmark index toward its biggest weekly loss since August, and currencies in the region dropped as unrest in the Middle East spread, U.S. jobless claims rose and an earthquake struck Japan.

The MSCI Asia Pacific Index dropped 1.7 percent to 133.87 as of 4:36 p.m. in Tokyo, with losses accelerating after the quake rocked buildings in Japan’s financial center and a tsunami as high as 10 meters was reported in northern Japan. Futures on the Euro Stoxx 50 Index fell 1 percent. Standard & Poor’s 500 Index futures slipped 0.5 percent after the gauge sank to the lowest level since January after the jobs data and ahead of a retail-sales report today.

The quake struck at 2:46 p.m. local time 130 kilometers (81 miles) off the coast of Sendai north of Tokyo, at a depth of 24 kilometers, according to the U.S. Geological Service. A tsunami inundated several towns on the northeast coast. Separately, Muammar Qaddafi’s son said Libyan government forces are mounting a full-scale attack on rebels, while Saudi Arabia said security forces broke up a protest, a day before what anti-government demonstrators have called a “Day of Rage.”

“The Japan earthquakes added another uncertainty to markets that were already plagued with turmoil in the Middle East and European debt concerns,” said Kang Shin Woo, chief investment officer at Seoul-based Korea Investment Management Co., which manages $17 billion. “This could raise concern for the Japanese economy that has showed some signs of recovery.”

More than eight stocks dropped for each that gained and all 10 industry groups declined on the MSCI Asia Pacific Index, which is headed for an almost three-month low and its biggest weekly loss since August. China’s Shanghai Composite Index dropped 0.8 as a report showed that consumer prices rose 4.9 percent in February from a year earlier, exceeding the government’s 2011 target for a fifth month.

Nikkei Futures

Nikkei 225 Stock Average futures traded in Singapore lost as much as 3.8 percent after the close of Tokyo share trading.

The yen fell versus all 16 of its most-traded counterparts after the 8.8 magnitude temblor struck northeast of Tokyo. Japan’s Nikkei 225 Stock Average accelerated losses, closing down 1.7 percent.

“The quake and fires in Tokyo only added to the regional bearish sentiment, sending the Nikkei into a tailspin for the close as Tokyo Brokers canceled orders and staff left buildings,” said Gavin Parry, managing director of Parry International Trading Ltd in Hong Kong. “It’s even more uncertainty that could weigh on markets.”

Toyota, Honda

Honda Motor Co., the Japanese carmaker that gets about 44 percent of sales in North America, and Toyota Motor Corp., the world’s biggest automaker, dropped at least 1.5 percent in Tokyo. BHP Billiton Ltd., the world’s largest mining company declined 1 percent in Sydney.

The MSCI Emerging Markets Index’s decline accelerated after the quake, falling as much as 1 percent. India’s Bombay Stock Exchange Sensitive Index sank 1.3 percent and China’s Shanghai Composite Index lost 0.8 percent.

The S&P 500 retreated 1.9 percent yesterday following the increase in jobless claims, a wider American trade deficit and a slowdown in China’s export growth. The Labor Department said applications for first-time unemployment benefits rose by 26,000 to 397,000 in the week ended March 5. Economists forecast claims would climb to 376,000, according to the median estimate in a Bloomberg News survey.

Separately, the Commerce Department said the trade deficit in goods and services rose 15 percent to $46.3 billion in January as a surge in imports led by costlier oil overshadowed record exports.

U.S. Data

Today’s report will show retail sales climbed by the most in four months, according to the median forecast of economists surveyed by Bloomberg News ahead of Commerce Department figures. Separately, European leaders are due to meet today having set a March 25 deadline to approve a “comprehensive” package of measures to end the sovereign-debt crisis.

Data today may show U.S. consumer sentiment worsened this month. The Thomson Reuters/University of Michigan preliminary March index of consumer sentiment dropped to 76.3 from 77.5 in February, according to the median estimate of economists in a Bloomberg News survey.

“It seems there is a re-assessment of risk in light of events like the Middle East civil unrest, European sovereign debt issues and issues to do with the Chinese economy,” said Tim Schroeders, who helps manage $1 billion at Pengana Capital Ltd. in Melbourne. Investors are waiting for a clearer way forward before committing to greater risk taking.’’

Wheat Declines

Wheat for May delivery fell 0.3 percent to $7.38½ per bushel, and headed for a weekly decline of 11 percent, the worst performance for the most active contract since December 2008.

Copper in London dropped as much as 0.7 percent to $9,130 a metric ton today, reversing a gain of as much as 0.9 percent, and is set for a weekly loss of 7.1 percent, the worst performance since June. The Thomson Reuters/Jefferies CRB Index of 19 commodities dropped 2.3 percent this week, and headed for the biggest decline since January.

Japanese 10-year bond futures for June delivery gained 0.5 to 139.20 at the Tokyo Stock Exchange after the quake. Separately, the Asahi newspaper reported Japanese Prime Minister Naoto Kan accepted a donation from a foreign resident in violation of political contribution laws. Kan said today in parliament he will return the money if the donation is confirmed.

Retail Sales

U.S. retail sales increased 1 percent, following a 0.3 percent gain in January, according to the median forecast in a Bloomberg News survey of economists before the report.

The cost of protecting Asia-Pacific corporate and sovereign bonds from default increased, according to traders of credit- default swaps. The Markit iTraxx Australia index rose 1 basis point to 110 basis points as of 10:35 a.m. in Sydney, according to Nomura Holdings Inc. It’s on track for its highest close since Feb. 23, prices from data provider CMA in New York show.

The Markit iTraxx Asia index of 50 investment-grade borrowers outside Japan climbed 1.5 basis points to 109 basis points as of 8:40 a.m. in Hong Kong, the highest since March 2, Royal Bank of Scotland Group Plc and CMA prices show.

“The market was taken by surprise by the range of unexpected data from each major region,” said James Holt, who helps manage about $40 billion in Sydney at BlackRock Investment Management (Australia) Ltd. “We’ll have to see if the surprise rise in U.S. jobless data numbers is just another hiccup or a trend. Spain’s downgrade just reminds everyone the trouble that peripheral Europe is in.”

Consumer Prices

The advance in China’s consumer prices was more than the 4.8 percent median forecast in a Bloomberg News survey of 22 economists. In January, the rise was also 4.9 percent.

Investors are concerned that monetary tightening to tame inflation may slow the Chinese economy, weakening a global expansion already hampered by elevated unemployment in the U.S. and sovereign debt woes in Europe.

Chinese central bank governor Zhou Xiaochuan said at a briefing in Beijing today that the nation will use interest rates to control inflation and that the yuan’s exchange rate isn’t the most important tool for controlling consumer price gains.

To contact the reporter on this story: Shani Raja in Sydney at sraja4@bloomberg.net

To contact the editor responsible for this story: Nick Gentle at ngentle2@bloomberg.net

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