By Chen Shiyin and Chua Kong Ho Dec. 12 (Bloomberg) -- Asian stocks, U.S. index futures and the dollar tumbled after the Senate rejected a $14 billion automaker bailout plan for American automakers, threatening millions of jobs and a deepening of the global recession. Honda Motor Co. and Nissan Motor Co. tumbled more than 12 percent in Tokyo, while U.S. index futures sank. The dollar fell to a 13-year low against the yen, while the cost of protecting Asian bonds against default advanced. Treasuries rose, pushing two-year note yields to a record low. Metal and crude oil prices slumped. The action is a blow to General Motors Corp. and Chrysler LLC, which may run out of cash early next year. “The potential bankruptcy of U.S. automakers has huge ramifications for the many companies that depend on them, from steelmakers, tiremakers to the car dealers,” said Daphne Roth, the Singapore-based head of equity research at ABN Amro Private Bank, which manages about $27 billion of Asian assets. “It’s a bleak scenario.” The MSCI Asia Pacific Index lost 4.2 percent to 84.29 as of 1:38 p.m. in Tokyo. Futures on the Standard & Poor’s 500 Index declined 4.6 percent. The measure yesterday dropped 2.9 percent, led by financial shares. “It’s over with,” Majority Leader Harry Reid said on the Senate floor in Washington. “I dread looking at Wall Street tomorrow. It’s not going to be a pleasant sight.” Japan’s Nikkei 225 Stock Average retreated 6.8 percent to 8,128.06. The CSI 300 Index sank 2.2 percent in China, after a government official said growth will slow more sharply next quarter and as retail sales grew at the slowest pace in nine months. China Mobile Ltd. fell 7.1 percent in Hong Kong. Annual Slump South Korea’s Kospi Index fell 5.2 percent, led by KB Financial Group Inc., after the Bank of Korea said the economy will expand at the slowest pace in 11 years in 2009. The first simultaneous recession in the U.S., Europe and Japan since World War II has roiled equity markets globally, taking the MSCI Asian index’s valuation to 12.5 times estimated profit, about a third lower than at the start of 2008. The index has fallen 45 percent this year, the worst annual performance in its two-decade history. Honda, Japan’s second-largest automaker, tumbled 10 percent to 1,918 yen. Nissan Motor Co., the third biggest, plunged 12 percent to 306 yen. Hyundai Motor Co., South Korea’s No. 1 automaker, dropped 7.5 percent to 42,850 won. Connecticut Democrat Christopher Dodd, who was involved in the talks, said earlier talks faltered on a Republican demand that unionized autoworkers accept a reduction in wages next year, rather than later, to match those of U.S. autoworkers who work for foreign-owned companies. “More than saddened, I’m worried this evening about what we’re doing with an iconic industry,” Dodd said. “In the midst of deeply troubling economic times we are going to add to that substantially.” Dollar Slumps, Bond Risk Rises The failure of the talks sent the dollar to 89.89 yen, the lowest since August 1995. The Markit iTraxx Japan index of credit-default swaps rose 11.5 basis points to 332.5 at 10:27 a.m. in Tokyo, according to prices from BNP Paribas SA. Platinum, used to make catalytic converters for car and truck exhaust systems, fell as much as 2.6 percent in Asia, leading metal prices lower. Crude oil dropped as much as 4.1 percent, eroding yesterday’s 10 percent rally. “This is seriously bad news,” said Victor Shum, senior principal at consultants Purvin & Gertz Inc. in Singapore. “If the automakers go bankrupt then they’ll be a whole domino impact of potential job losses. If the recession is deepened then surely it will impact demand.” Yield Tumble The yield on the 10-year note fell 0.06 percentage point to 2.55 percent as of 1:15 p.m. in Tokyo, according to BGCantor Market Data. The price of the 3.75 percent security due in November 2018 rose 16/32, or $5 per $1,000 face amount, to 110 14/32. Two-year yields dropped eight basis points to 0.707 percent, the lowest since regular sales began in 1975. China Mobile, the world’s No. 1 phone company by value, lost 7.1 percent to HK$76.50. Industrial and Commercial Bank of China Ltd., the nation’s largest, dropped 2.9 percent to HK$4.32. China Shipping Development Co., the nation’s largest oil carrier, fell 12 percent to HK$7.73, the biggest loss on MSCI’s Asian index. China’s growth will slow more sharply in the first quarter of 2009 before stabilizing and then recovering, Liu He, vice minister of the Central Leading Group on Financial and Economic Affairs said in Beijing today. Retail sales rose 20.8 percent in November, the slowest pace in nine months, the National Bureau of Statistics also said today. Consumer Stocks Wuliangye Yibin Co., China’s biggest spirits maker, fell 3.8 percent to 15.12 yuan. Concern that China’s economic growth will slow spurred the government to pledge on Nov. 4 to implement a 4- trillion yuan ($583 billion) economic stimulus package and the benchmark lending rate was cut by the most in 11 years. In South Korea, the central bank said economy will grow 2 percent next year from an estimated 3.7 percent this year. Exports of goods will rise 1.3 percent, slowing from an estimated 3.6 percent gain in 2008, the Bank of Korea also forecast. KB Financial plunged 10 percent to 33,000 won, the biggest slump since Nov. 20. Shares of the company, which controls South Korea’s largest bank, also retreated after it raised 400 billion won ($294 million) from the sale of treasury shares. Signs of slowing expansion in the U.S. also weighed on the region’s stocks. The number of Americans filing first-time claims for unemployment benefits surged to 573,000 last week, the Labor Department said. That’s the highest level since November 1982. James Hardie, which gets more than three-quarters of its sales from the U.S., fell 9.6 percent to A$3.78, on track for its largest drop since Nov. 19. Canon Inc., the world’s biggest digital-camera maker, declined 4.2 percent to 2,635 yen. To contact the reporter for this story: Chen Shiyin in Singapore at schen37@bloomberg.net; Chua Kong Ho at kchua6@bloomberg.net

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