By Patrick Rial and Shani Raja Dec. 16 (Bloomberg) -- Asia stocks fell, erasing a quarter of yesterday’s gain, as concern the deepening global recession will stifle earnings growth sent commodity producers and electronics makers lower. BHP Billiton Ltd., the world’s biggest mining company, dropped 2.2 percent after saying it isn’t immune to a slump in coal demand that led Macarthur Coal Ltd. to slash its profit forecast and suspend its dividend. Macarthur plunged 22 percent. JFE Holdings Inc., Japan’s No. 2 steelmaker, lost 4.9 percent after the Nikkei newspaper said Toyota Motor Corp. will ask for lower steel prices. Sony Corp. slid 5.2 percent as Credit Suisse Group reduced its rating. “Resources get roasted in a recession,” said Prasad Patkar, who helps manage $800 million at Platypus Asset Management in Sydney. “If nobody wants their shipments, they can’t supply, whatever the commodity price.” The MSCI Asia Pacific Index declined 1.1 percent to 87.09 as of 2:06 p.m. in Tokyo, paring yesterday’s 4.4 percent advance. About nine stocks fell for every seven that gained, while nine out of the 10 industry groups dropped. Futures on the Standard & Poor’s 500 Index slipped 0.3 percent. The first simultaneous recessions by Japan, the U.S. and Europe since World War II has dragged the Asian gauge down 45 percent this year, the worst annual decline in its 20-year history. Shares in the index now trade to an average price of 5 times cash flow, half the level at the start of the year. Japan’s Nikkei 225 Stock Average dropped 0.6 percent to 8,610.51. Daiwa Securities Group Inc., the country’s second- largest brokerage, slumped 4.4 percent after saying it may raise as much as $1.1 billion. Factory Spending China’s CSI 300 Index lost 1.5 percent, led by a 2 percent retreat in Sany Heavy Industry Co., after spending on factories and real estate slowed. China Cosco Holdings Co. slumped 7.2 percent after reporting a loss on shipping derivatives. A decline in U.S. manufacturing drove the S&P 500 Index down 1.3 percent yesterday, while the New York Federal Reserve’s regional economic index slipped to the lowest level since the tally began in 2001. BHP fell 2.2 percent to A$30.23 after saying it isn’t immune to the “uncertain” market for coal. Macarthur Coal, the world’s biggest exporter of pulverized coal that’s used in steelmaking, plunged a record 22 percent to A$2.74 as it cut its profit forecast for the six months to Dec. 31 in half. The company also suspended its dividend, citing a “sudden and unprecedented” drop in coal sales. Fortescue Metals Group Ltd., which produces iron ore used in steel production, retreated 6.1 percent to A$2.46 after Morgan Stanley said the company may post a first-half loss as deliveries miss forecasts. Production Cuts The global recession has curbed demand for steel, prompting mills in Asia, Europe and North America to slash purchases of raw materials. Toyota, the world’s second-largest automaker, will ask for a 30 percent reduction in steel sheet prices for the year starting in April, on slumping demand for cars, the Nikkei newspaper said. JFE tumbled 4.9 percent to 2,425 yen. Nippon Steel Corp., the world’s second-largest steelmaker by output, fell 3.7 percent to 285 yen. Hitachi Metals Ltd. fell 14 percent to 506 yen after the maker of specialty steel and metal products lowered its profit forecast by 83 percent, citing weak demand. Sany Heavy, China’s biggest maker of machinery for handling concrete, lost 2 percent to 15.92 yuan. Angang Steel Co., the nation’s second-largest steelmaker by market value, fell 1.6 percent to 7.28 yuan. China’s fixed-asset investment in urban areas slowed to 16.8 percent in the first 11 months as property sales dropped and export growth collapsed. Annual Slump The country’s benchmark stock index has lost 64 percent this year, Asia’s second-worst performer, as the slowdown in exports and industrial output threatens to drag economic growth below the 8 percent target the government says is needed to maintain jobs and avoid social unrest. The economy may expand 5.5 percent in the first quarter, CFC Seymour estimates. China Cosco, the world’s largest operator of dry-bulk ships, slid 7.1 percent to 8.60 yuan after saying it may lose 3.95 billion yuan ($577 million) from forward freight agreements. In Japan, Daiwa declined 4.7 percent to 472 yen. The nation’s second-largest brokerage said it may raise as much as 100 billion yen ($1.10 billion) to boost capital after the company swung to a loss last quarter. Financial companies worldwide have raised $918 billion as the collapse of the U.S. mortgage market and the global equity rout sparked almost $1 trillion in losses and writedowns. Madoff Investment HSBC Holdings Plc, Europe’s biggest bank, may seek to raise about $14 billion as increasing bad-loan provisions erode profit, CLSA Asia-Pacific Markets said. The stock fell 0.2 percent to HK$84. The bank said yesterday it has $1 billion at risk after providing financing to funds that invested with Bernard Madoff, whose New York-based money-management firm collapsed last week. Aozora Bank Ltd. dropped 5.2 percent after saying it has 12.4 billion yen ($137 million) at risk invested with Madoff. Consumer electronics makers fell as analysts cut their ratings. Sony, the maker of Bravia liquid-crystal display televisions, lost 5.2 percent to 1,837 yen. Samsung Electronics Co., the world’s biggest computer-memory maker, dropped 3.7 percent to 454,500 won. Sony was lowered to “underperform” from “neutral” by Koya Tabata at Credit Suisse, citing plunging prices for televisions and a market glut of lithium batteries. Samsung was reduced to “neutral” at JPMorgan Chase & Co. “Given the ongoing job cuts across the board, we expect a disappointing demand outlook for consumer products,” JJ Park wrote in a note to clients. Telstra, Morinaga Telstra Corp., Australia’s largest phone company, fell for a second day, losing 4.1 percent to a record low A$3.50. Goldman Sachs Group Inc. and JPMorgan Chase & Co. cut their share-price estimates on the stock after the government rejected the company’s bid to build a nationwide high-speed Internet network. Morinaga & Co., a Japanese maker of cocoa, ice cream and chocolate snacks, rose 5.8 percent to 202 yen after the Nikkei newspaper reported it may merge with Morinaga Milk Industry Co. Both companies denied they were in talks. Morinaga Milk retreated 1.2 percent to 343 yen. To contact the reporter for this story: Patrick Rial in Tokyo at prial@bloomberg.net; Shani Raja in Sydney at sraja4@bloomberg.net.

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