Japan Stock Futures, Australia Stocks Fall on Italy Yield Surge

Japanese stock futures and Australian shares fell after Italian borrowing costs surged at a note sale, reviving concern Europe’s sovereign-debt crisis is spreading, damping investor confidence for riskier assets.

American depositary receipts of Sony Corp. (6758), Japan’s No. 1 exporter of consumer electronics, fell 1.7 percent from the closing share price in Tokyo. Those of Mizuho Financial Group Inc. (8411), Japan’s third-largest bank by market value, slid 1.9 percent after net income fell 26 percent. BHP Billiton Ltd. (BHP), the Australian miner and oil producer, dropped 0.9 percent after crude fell.

Futures on Japan’s Nikkei 225 (NKY) Stock Average expiring in December closed at 8,575 in Chicago yesterday, down from 8,620 in Osaka, Japan. They were bid in the pre-market at 8,560 in Osaka, at 8:05 a.m. local time. Australia’s S&P/ASX 200 Index dropped 0.1 percent today. New Zealand’s NZX 50 Index fell 0.3 percent in Wellington.

“Bond tenders in Italy last night just underscore that investors are not going to pay too much to risk at this stage, given the prevailing uncertainty,” said Tim Schroeders, who helps manage $1 billion in equities at Pengana Capital Ltd. in Melbourne. “You have to remain steadfast and disciplined in looking for opportunities when the market gets hysterical either on the buy side and sell side, not get caught up in day-to-day noise.”

Italian, Spanish Yields

The Standard & Poor’s 500 Index lost 1 percent yesterday in New York after the yield on Italian five-year debt surged following an auction and Spanish 10-year yields advanced to a euro-era record relative to German yields. Futures on the S&P 500 fell 0.1 percent today.

Stock also fell after German Finance Minister Wolfgang Schaeuble said Europe’s permanent bailout fund may not be implemented before 2013. German Chancellor Angela Merkel’s Christian Democratic Union party voted to offer euro states a “voluntary” means of leaving the currency area.

The MSCI Asia Pacific Index declined 14 percent this year through yesterday, compared with a 0.5 percent drop by the S&P 500 and a 13.5 percent loss by the Stoxx Europe 600 Index. Stocks in the Asian benchmark are valued at 12.9 times estimated earnings on average, compared with 12.6 times for the S&P 500 and 10.3 times for the Stoxx 600.

Crude oil for December delivery dropped 85 cents to settle at $98.14 a barrel on the New York Mercantile Exchange.

To contact the reporter on this story: Yoshiaki Nohara in Tokyo at ynohara1@bloomberg.net

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

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