Asian Stocks Fall on EU Outlook; Australia Shares Drop
Asian stocks fell, with the regional benchmark index poised for its longest losing streak in six weeks, as the European Union’s outlook was cut by Moody’s Investors Service ahead of policy makers’ meetings. Australian shares declined as the central bank left the key rate unchanged.
Mobile phone maker LG Electronics Inc. (066570), which gets 16 percent of its sales in Europe, fell 2.2 percent in Seoul. Westpac Banking Corp. (WBC), Australia’s second-biggest lender by market value, slid 2.1 percent. Agile Property Holdings (3383) Ltd. declined 4.7 percent in Hong Kong as its rating was cut at DBS Vickers after its chairman was arrested.
The MSCI Asia Pacific Index fell 0.4 percent to 117.27 as of 7:59 p.m. in Tokyo, headed for a four-day decline, the longest streak since July 25. About 11 stocks dropped for every seven that gained on the measure.
The European Central Bank “is more likely to trigger action when they meet” in two days, said Matthew Sherwood, Sydney-based head of markets research at Perpetual Investments, which manages about $25 billion. “Whether it’s comprehensive enough to keep sentiment strong and keep markets rallying is a different issue because in the end there’s not much central banks can do to address the global debt situation.”
The MSCI Asia Pacific Index added 0.4 percent this quarter through yesterday as expectations for further stimulus measures countered signs of a global economic slowdown. The Asian benchmark traded at 12.3 times estimated earnings as of last week, compared with 13.6 times for the Standard & Poor’s 500 Index (SPXL1) and 11.7 times for the Stoxx Europe 600 Index.
Futures on the S&P 500 slipped 0.1 percent today before a report expected to show manufacturing teetered between growth and contraction in August after shrinking in July. U.S. equity markets were shut yesterday for a holiday.
Australia’s S&P/ASX 200 fell 0.6 percent. Japan’s Nikkei 225 Stock Average fell 0.1 percent. South Korea’s Kospi index slid 0.3 percent. New Zealand’s NZX 50 Index gained 0.2 percent. Hong Kong’s Hang Seng Index fell 0.7 percent. The Shanghai Composite Index lost 0.8 percent as Societe Generale SA cut its forecast for China’s real gross domestic growth.
The European Union’s outlook was cut to negative from stable by Moody’s, which came after ECB President Mario Draghi told officials he would be comfortable buying three-year government bonds to lower borrowing costs for nations in financial distress.
The ECB may cut its benchmark interest rate to 0.5 percent from 0.75 percent on Sept. 6, according to the median estimate of economists surveyed by Bloomberg.
European leaders are stepping up shuttle diplomacy this week in efforts to preserve the monetary union. EU President Herman Van Rompuy is traveling to Berlin for talks with German Chancellor Angela Merkel today as Italian Prime Minister Mario Monti welcomes French President Francois Hollande to Rome.
LG Electronics fell 2.2 percent to 68,200 won. Shimano Inc., a maker of bicycle parts that depends on Europe for 36 percent of its sales, dropped 2.4 percent to 5,590 yen in Osaka.
Banks led declines among shares in Sydney after the Reserve Bank of Australia left the overnight cash-rate target at 3.5 percent as domestic demand weathers a global slowdown. Westpac slid 2.1 percent to A$24.32 and Australia & New Zealand Banking Group Ltd. (ANZ), Australia’s third largest lender, dropped 2 percent to A$24.34.
Agile Properties declined 4.7 percent to HK$8.21 after its rating was cut to hold from buy at DBS. Chairman Chen Zhuo Lin was arrested by police in Hong Kong in connection with an allegation of indecent assault, the company said in a statement on Aug. 31.
SouthGobi Resources Ltd., a coal producer in Mongolia controlled by Rio Tinto Group, fell 6.5 percent to HK$19.02 after Aluminum Corp of China Ltd., also called Chalco, dropped its C$925 million ($939 million) partial offer.
Chalco slid 0.3 percent to HK$2.91. The company’s initial offer to buy a 60 percent stake in SouthGobi stalled in May when Mongolia passed a law restricting foreign-state-owned companies from controlling key assets.
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