Asian stocks fell, dragging the MSCI Asia Pacific Index to a two-week low, on concern over the pace of China’s economic recovery. China Minsheng Banking Corp. and Angang Steel Co. sank at least 2 percent in Shanghai and Shenzhen respectively after the Conference Board corrected its April gauge for the outlook of China’s economy to indicate slower growth and Citigroup Inc. said the country’s exports face “strong headwinds.” Inpex Corp., Japan’s biggest oil explorer, slumped 4.3 percent as crude-oil prices retreated. The MSCI Asia Pacific Index lost 1 percent to 114.51 as of 2:15 p.m. in Tokyo, set for its lowest close since June 15. The gauge has slumped 11 percent from its high this year on April 15 on concern Europe’s debt crisis and Chinese steps to curb property prices will hurt global growth. Material and energy stocks led today’s declines. “The market is pausing to digest the implications of the macro overhang of the last couple of weeks,” said Jason Teh, who helps manage $3 billion at Investors Mutual Ltd. in Sydney. “Markets are maybe realizing the growth trajectory may be slower because there is still too much leverage in the system.” Japan’s Nikkei 225 Stock Average sank 1.4 percent, reversing an earlier gain of as much as 0.7 percent as the yen strengthened against the dollar. Canon Inc., a maker of consumer electronics that gets almost 80 percent of its sales outside Japan, sank 2.2 percent. China’s Shanghai Composite Index slumped 2.8 percent and Hong Kong’s Hang Seng Index lost 1.1 percent. South Korea’s Kospi dropped 1.3 percent, while Australia’s S&P/ASX 200 Index lost 0.6 percent. China Stocks Fall Futures on the Standard & Poor’s 500 Index lost 0.6 percent. The index fell 0.2 percent yesterday, dragging the gauge lower for the fifth time in six days, as oil and metal prices dropped. Concerns global growth will slow have helped drag the average price of MSCI Asia Pacific Index down to about 14.2 times estimated profit, compared with 24 times a year earlier. Government reports today showed that Japan’s industrial production and household spending slipped in May and the unemployment rate unexpectedly increased, in signs that the recovery of the world’s second-largest economy may slow. Minsheng Banking, China’s first privately owned bank, dropped 3.3 percent to 6.14 yuan. Angang Steel lost 2.9 percent to 7.42 yuan. Hitachi Construction Machinery Co., which counts China as its biggest market, dropped 2.8 percent to 1,677 yen in Tokyo, reversing a 1.6 percent advance. ‘Calculation Error’ The Conference Board said its index of leading Chinese economic indicators rose 0.3 percent in April, less than the 1.7 percent gain reported on June 15. The New York-based research firm said in an e-mailed statement the previous release contained a “calculation error.” “This correction doesn’t affect our outlook for the Chinese economy,” William Adams, resident economist for the Conference Board in Beijing, said in a telephone interview. China’s exports face “strong headwinds” in the second half of the year from policy tightening measures and the European debt crisis, reducing prospects of a rebound in the stock market, Citigroup Inc. said in a report obtained today. The government is seeking to sustain the nation’s expansion while cooling property prices after record credit growth increased concern inflation will accelerate. The Shanghai Composite has tumbled 25 percent this year, the third-biggest slump among 93 major indexes tracked by Bloomberg. Inpex slumped 4.3 percent to 491,000 yen. Crude oil futures in New York lost 0.9 percent to $77.58 a barrel in after-hours trading, extending yesterday’s 0.8 percent decline. Woodside Petroleum Ltd., Australia’s No. 2 oil and gas producer, slipped 1.3 percent to A$42.72. Yen Strength Canon sank 2.2 percent to 3,415 yen as a stronger yen hurt the earnings outlook for Japan’s exporters. Honda Motor Co., Japan’s second largest car maker, dropped 1.4 percent to 2,646 yen, after rising as much as 0.9 percent earlier. The yen surged during the midday break in Tokyo and strengthened to as much as 108.80 against the euro from 110.65 at the close of Japanese stock trading yesterday. Against the dollar, the yen appreciated to as much as 88.75 from 89.37. A stronger yen reduces the value of overseas income for Japanese companies when converted into their home currency. “The stock and currency markets have just entered a negative spiral,” said Ayako Sera, a strategist in Tokyo at Sumitomo Trust & Banking Co., which manages about $310 billion. Falling stock prices lead to lower risk tolerance, which strengthens the yen and further hurts equities, she said. Among stocks that rose today, Tokio Marine Holdings Inc. climbed 1 percent to 2,382 yen on plans to buy back as many as 16 million shares, or 2 percent of its stock. Nippon Telegraph & Telephone Co. climbed 1.2 percent to 3,670 yen. The company’s NTT Finance Corp. unit may post its first operating profit in three years, Nikkei English News reported, without saying where it got the information. To contact the reporters on this story: Shani Raja in Sydney at sraja4@bloomberg.net.

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