Asia’s stocks dropped on concern the global recovery is faltering as a report on U.S. home sales later today may show the world’s biggest economy slowed. The yen and dollar climbed against most major currencies. The MSCI Asia Pacific Index fell 0.7 percent to 117.53 as of 3 p.m. in Tokyo, led by Japan’s Nikkei 225 Stock Average slump into a bear market. The yen advanced to an eight-year high against the euro and the dollar rose to a six-week high versus the common currency. Standard & Poor’s 500 Index futures slid 0.2 percent after the benchmark slid to a five-week low and those for the Euro Stoxx 50 decreased 0.5 percent. Sales of existing U.S. homes dropped 13 percent to a 4.65 million annual rate in July, according to the median estimate of economists in a Bloomberg News survey ahead of the National Association of Realtors report today, while another poll ahead of tomorrow’s data showed new home sales held at an annual pace of 330,000 in July. “We’re not seeing sustained signs of recovery in U.S. consumption, housing market or job market,” said Lim Chang Gue, a fund manager at Samsung Asset Management in Seoul, which manages $27 billion. “Investors will be worried if the U.S. economy appears to be entering a long-lasting slowdown phase, and some also question the sustainability of strong corporate earnings.” The Nikkei 225 declined 1.4 percent, falling more than 20 percent from its high this year on April 5, a drop that analysts define as a bear market. Australia’s S&P/ASX 200 Index fell 1 percent, while Vietnam’s VN Index slumped 3 percent, also entering a bear market after falling 21 percent from its May 6 peak this year. The Philippine Stock Exchange Index slid 2.3 percent, the most in 11 weeks, after a bus hostage siege in Manila ended with the deaths of eight Hong Kong tourists. Equity Movers Canon Inc., which gets 28 percent of its revenue from the Americas, declined 1 percent in Tokyo as a strengthening yen threatened to erode Japan’s export earnings. Foster’s Group Ltd., Australia’s biggest beer and wine maker, slumped 4.2 percent after a second-half loss. Vietnam Joint-Stock Commercial Bank for Industry & Trade, the country’s second-biggest listed lender by market value, dropped 4 percent to a record low. The yen and dollar advanced as concern the global economy is slowing boosted demand for the currencies as a refuge. The yen strengthened to as much as 107.22 per euro, the highest since November 2001, while the dollar traded as high as $1.2621 versus the euro, the strongest since July 13. “Whenever we see negative numbers globally, risk aversion causes the dollar and yen to be bought,” said Yoshiaki Ota, head of the foreign-exchange trading group in Tokyo at Sumitomo Mitsui Banking Corp., a unit of Japan’s third-largest banking group. Asian Currencies Drop Australia’s dollar fell 0.7 percent to 75.39 yen amid falling prices for commodities, which make up 60 percent of the nation’s exports. The South Korean won lost 0.5 percent to 1,187.75 per dollar, reaching a one-week low, on speculation overseas investors are paring holdings of riskier emerging- market assets. The Philippine peso declined 0.6 percent. Olli Rehn, the European Union commissioner for economic and monetary affairs, said yesterday in a Bloomberg Television interview that a slowdown in the U.S. recovery and turmoil in the sovereign debt markets could cause concern in Europe, where growth is likely to decelerate in the second half. The U.S. Commerce Department may revise lower its second- quarter growth rate to the slowest since the recovery began, according to the median forecast of economists in a Bloomberg News survey. Oil Drops Oil declined for a fifth day, dropping 0.5 percent to $72.80 a barrel in New York, after analysts estimated that U.S. inventories of crude rose last week, indicating slowing demand in the world’s largest user of the fuel. The cost of protecting Australian and Asian corporate and sovereign bonds from default climbed to the highest in more than a month, according to traders of credit-default swaps. The Markit iTraxx Asia index of 50 investment-grade borrowers outside Japan climbed 2 basis points to 126 basis points, Credit Agricole CIB prices show, while the Markit iTraxx Australia index rose 2.5 basis points to 122.5 basis points, the highest since July 22, according to Nomura Holdings Inc. and CMA. To contact the reporters on this story: Linus Chua in at lchua@bloomberg.net; Saeromi Shin in Seoul at sshin15@bloomberg.net.

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