Asian stocks fell, with the region’s benchmark index dropping for the first time in six days, as concern of slowing demand dragged down shares of Sharp Corp. and Billabong International Ltd. The yen strengthened to a seven- week high against the euro. The MSCI Asia Pacific Index slumped 1.3 percent to 118.55 as of 3:13 p.m. in Tokyo. The yen appreciated to as much as 109.02 per euro. A measure of the risk of bond defaults in Australia climbed the most in more than a week. Futures on the Euro Stoxx 50 Index sank 0.4 percent, and futures on the Standard & Poor’s 500 Index were little changed after the index dropped 1.7 percent yesterday to its lowest close since July 21. Sharp slid 2.7 percent in Tokyo after the Nikkei newspaper said the company will cut production of liquid-crystal display panels. Billabong plunged 10 percent in Sydney as the surfwear maker forecast earnings that missed analysts’ estimates. Doubts about a U.S. economic recovery increased after reports yesterday showed jobless benefits climbed more than economists estimated and a Philadelphia-area manufacturing index unexpectedly dropped. “Investor sentiment has been negative across global equity markets,” said Hisakazu Amano, who helps oversee about $29 billion in Tokyo at T&D Asset Management Co. “Demand is declining across the world and the economic recovery can’t be achieved without a rebound in demand.” Japan’s Nikkei 225 Stock Average fell 2 percent, the biggest drop among benchmark equity indexes in Asia. Australia’s S&P/ASX 200 Index slumped 1.1 percent, South Korea’s Kospi Index lost 0.2 percent and Hong Kong’s Hang Seng Index slid 0.7 percent. China’s Shanghai Composite Index slumped 1.2 percent on speculation inflation will delay monetary easing and provisions for local-government loans will erode bank profits. Earnings, Valuations Billabong tumbled in Sydney after the company forecast net income that was short of what analysts expected. Sony Corp. lost 2.5 percent, Panasonic Corp. decreased 1.8 percent and Samsung Electronics Co. sank 0.6 percent after the report about Sharp, which makes screens used in TVs, computers and game players. Bank of Communications Co. slid 1.5 percent. Chinese banks may need about 600 billion yuan ($88.4 billion) in provisions for bad local-government loans, the Securities Times reported, citing its own calculations based on government figures. China Construction Bank Corp., the nation’s second-largest lender, was little changed ahead of its first-half results today. Profit in the six months ended June rose 24 percent to 69.1 billion yuan ($10.2 billion), according to the median of estimates in a Bloomberg News survey of seven analysts. The MSCI Asia Pacific Index was headed to its biggest drop since Aug. 12, cutting the average price of stocks in the gauge to 13.7 times estimated earnings, near the cheapest level since December 2008, according to data compiled by Bloomberg. Jobs, Manufacturing Second-quarter earnings for companies in the index increased 145 percent on average, with profits from technology and industrial companies rising the most, according to Bloomberg data compiled from the 498 companies in the gauge that have reported them. Net income for this quarter may jump 48 percent, analysts’ estimates show. Japan’s currency strengthened against the euro to its highest level since July 1, as concern the U.S. economy is slowing drove investors to the yen as a haven. The yen was at 85.27 per dollar from 85.39. A U.S. Labor Department report yesterday showed claims for jobless benefits jumped by 12,000 to 500,000 in the week ended Aug. 14, the highest level since November and more than all 42 estimates by economists surveyed by Bloomberg News. The Federal Reserve Bank of Philadelphia’s factory index unexpectedly fell, signaling contraction, while economists surveyed expected a gain. ‘Reinforces Fears’ South Korea’s won fell 0.5 percent to 1,178.05 per dollar and Malaysia’s ringgit weakened 0.2 percent to 3.1337 per dollar, the first drop in four days for both, on concern a stalling U.S. recovery signals Asian exports will weaken. “The negative jobless claims data reinforces fears that the employment picture and the broader economy in the U.S. is not improving,” said Brad Bechtel, a Stamford, Connecticut- based currency trader at Faros Trading LLC. “Hedge funds that invest in Asian currencies like Korea will likely trim their risk, given the likely impact to the export sector in Korea.” The Markit iTraxx Australia index of credit-default swap prices climbed 5 basis points to 121.5 basis points in Sydney, according to Westpac Banking Corp. The risk benchmark is headed for its biggest increase since Aug. 11 and its highest close since Aug. 12, according to CMA in New York. Wheat climbed for a third day as demand for U.S. exports increased and the Grain Union in Russia said the country would probably import 2.5 million metric tons of grains, more than six times purchases a year earlier, after drought slashed its crop. December-delivery wheat jumped as much as 2.1 percent to $7.29 a bushel on the Chicago Board of Trade. To contact the reporters on this story: Nicolas Johnson in Tokyo at nicojohnson@bloomberg.net; Monami Yui in Tokyo at myui1@bloomberg.net.

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