Australian Stocks Heading for Biggest Weekly Drop in 10 Months

Australian stocks fell, sending the benchmark gauge toward its biggest weekly drop in 10 months, and Japanese futures slid as concern Europe’s debt crisis is worsening overshadowed better-than-forecast U.S. economic data.

BHP Billiton Ltd., the world’s largest mining company, slid 0.6 percent as metals prices retreated. American Depositary Receipts of Canon Inc. (7751), the camera maker that gets 80 percent of sales outside Japan, lost 1.1 percent as the yen strengthened against the dollar from the close of Japan’s stock markets.

Futures on Japan’s Nikkei 225 Stock Average (NKY) expiring in June closed at 12,445 in Chicago yesterday, down from 12,570 at the close in Osaka, Japan. They were bid in the pre-market at 12,440 in Osaka at 8:05 a.m. local time. Australia’s S&P/ASX 200 Index (AS51) retreated 0.5 percent, extending this week’s decline to 3.6 percent. New Zealand’s NZX 50 Index fell 0.1 percent.

“It seems that the downturn could intensify” in Europe, said Matthew Sherwood, head of investment markets research in Sydney at Perpetual Investments, which manages about $25 billion. “Its leadership keeps looking at the hole in the hull and wondering why they are waist deep in water, rather than fixing the damage.”

The MSCI Asia Pacific Index, the benchmark regional equities gauge, yesterday traded at 15 times average estimated earnings compared with 14 for the Standard & Poor’s 500 Index (SPX) and 12.6 times for the Stoxx Europe 600 Index, according to data compiled by Bloomberg.

Futures on the Standard & Poor’s 500 Index were little changed. The S&P 500 yesterday fell 0.8 percent, with the measure heading for its biggest weekly decline of 2013, after an unexpected contraction in German manufacturing and as Cyprus’s president worked on a new plan to obtain a European bailout.

The European Central Bank said it may cut off Cypriot banks from emergency funds after March 25 as the island nation’s president, Nicos Anastasiades, struggled to forge agreement on plans to stave off financial collapse.

In the U.S., sales of previously owned homes rose in February to the highest level in more than three years. Purchases increased 0.8 percent to a 4.98 million annualized rate, the most since November 2009, figures from the National Association of Realtors showed yesterday in Washington.

The Bloomberg China-US Equity Index (CH55BN) of the most-traded Chinese shares in the U.S. dropped 1.1 percent in New York yesterday.

To contact the reporter on this story: Adam Haigh in Sydney at ahaigh1@bloomberg.net

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

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