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Japan Stock Futures, Australian Shares Fall as Debt Talks Fail

Nov. 22 (Bloomberg) -- Japanese stock futures and Australian shares fell after a U.S. congressional committee’s failure to agree on deficit cuts set the stage for $1.2 trillion in automatic spending cuts, damping investor demand for riskier assets.

American depositary receipts of Toyota Motor Corp., the world’s biggest carmaker by market value that gets 72 percent of its revenue outside Japan, fell 1.4 percent from the closing share price in Tokyo. Those of Mizuho Financial Group Inc., Japan’s third-largest bank by market value, dropped 3.1 percent as Hungary seeks financial assistance from the International Monetary Fund and the European Union, stoking concern the region’s debt crisis will worsen and hurt banks. Woodside Petroleum Ltd., an Australian oil and gas producer, slid 1.3 percent after oil fell.

Futures on Japan’s Nikkei 225 Stock Average expiring in December closed at 8,265 in Chicago yesterday, down from 8,360 in Osaka, Japan. They were bid in the pre-market at 8,260 in Osaka at 8:05 a.m. local time. Australia’s S&P/ASX 200 Index lost 1.5 percent today. New Zealand’s NZX 50 Index fell 0.4 percent in Wellington.

“Investors are a bit fed up with politicians generally. Politicians have been behind the curve all along, and I think the market is feeling uneasy about that,” said Prasad Patkar, who helps manage about $1 billion at Platypus Asset Management Ltd. in Sydney. “Quality businesses will be sold off unreasonably, and you have to be on the lookout for every opportunity you get. By the same token, in the current market, a stock rally will be quite hard as well.”

Debt Gridlock

Futures on the Standard & Poor’s 500 Index fell 0.2 percent today. The index dropped 1.9 percent in New York yesterday. The U.S. deficit-cutting congressional supercommittee said that it failed to reach an agreement, setting the stage for automatic spending cuts in 2013 and fueling concern that economic-stimulus measures that are set to expire will not be renewed.

The IMF and the European Commission confirmed yesterday that they received Hungary’s request for possible “precautionary” financial assistance, the two institutions said in separate e-mailed statements. Hungary on Nov. 17 said it plans to start talks for a “new type” of cooperation after the forint fell to a record low against the euro.

Hungary, the first European Union country to receive an IMF-led emergency bailout in 2008, abandoned its policy of shunning IMF assistance.

The MSCI Asia Pacific Index declined 18 percent this year through yesterday, compared with a 5.1 percent loss by the S&P 500 and a 19 percent drop by the Stoxx Europe 600 Index. Stocks in the Asian benchmark are valued at 12.2 times estimated earnings on average, compared with 12 times for the S&P 500 and 9.8 times for the Stoxx 600.

Crude oil for January delivery fell 75 cents to $96.92 a barrel on the New York Mercantile Exchange, the lowest settlement since Nov. 9.

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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