Asian stocks slumped, dragging the regional benchmark index from a three-month high, as lower-than- expected profit at China Mobile Ltd. and the prospect of rising bank losses curbed optimism the global economy is recovering. China Mobile, the world’s biggest wireless carrier, sank 5.5 percent in Hong Kong. Orix Corp., Japan’s No. 1 non-bank financial company, dropped 7.2 percent in Tokyo as Nomura Holdings Inc. downgraded the stock and Bank of America Corp. set aside more money to cover loan losses. Australia’s BHP Billiton Ltd., the world’s largest mining company, lost 3.3 percent as oil and metals prices slumped. The MSCI Asia Pacific Index lost 2.2 percent to 87.97 as of 1:48 p.m. in Tokyo, retreating from its highest close since Jan. 7. A 27 percent rally from a five-year low reached on March 9 had lifted the valuation of companies on the gauge yesterday to the highest since November 2007. “You’re seeing cold water being poured on the theme of a sharp rebound in growth,” said Tim Schroeders, who helps manage about $1 billion at Pengana Capital Ltd. in Melbourne. “It’s encouraging that a bottom has been perceived, but given the likelihood of a protracted period of low growth, some of these share prices ran ahead of reality.” Japan’s Nikkei 225 Stock Average tumbled 2.7 percent to 8,687.17. Australia’s S&P/ASX 200 Index slumped 2.1 percent as the central bank governor said the economy is in a recession. All of the region’s biggest markets declined. Mitsubishi Corp., Japan’s No. 1 trading company, led declines with a 6.7 percent drop after the Nikkei newspaper said falling coal prices will erode profits. Sony Corp., the world’s second-biggest consumer electronics maker, lost 4.7 percent in Tokyo, while Singapore’s Neptune Orient Lines Ltd., the biggest container carrier in Southeast Asia, slumped 3.6 percent as brokerages downgrade their shares. Safe Haven Futures on the Standard & Poor’s 500 Index added 0.4 percent. The gauge slid 4.3 percent yesterday, the most since March 2, as Bank of America increased reserves for future loan losses by 57 percent since the end of December. The MSCI World Index slumped 3.7 percent yesterday. Prospects for more bank losses spurred demand for the yen and gold as havens. The Japanese currency touched 97.66 versus the dollar, the highest since March 31, while bullion climbed 2.3 percent in New York. Treasuries advanced for a second day. Speculation the worst of the global recession has passed drove valuations on the MSCI Asia Pacific Index to 19 times reported profit yesterday, the highest since Nov. 2, 2007. The 14-day relative strength index for the gauge rose to 67.7 yesterday, nearing the 70 threshold that some traders see as a sign to sell. Financial Shares China Mobile slid 5.5 percent to HK$70.20. First-quarter net income rose 5.2 percent to 25.2 billion yuan ($3.3 billion), the company reported yesterday, the slowest growth rate in five years. The result missed the 26.5 billion yuan median estimate of five analysts in a Bloomberg survey as intensifying competition undermined earnings. Financial companies accounted for 34 percent of the MSCI Asia Pacific Index’s decline today. Orix, whose shares have more than doubled in the past month, retreated 7.2 percent to 4,410 yen. Wataru Ohtsuka, an analyst at Nomura, lowered Orix to “neutral” from “buy,” on the view that recent gains have reduced the attractiveness of the shares. HSBC Holdings Plc, which owns a U.S. mortgage business, fell 5.8 percent to HK$51.75 in Hong Kong. Shinhan Financial Group Co., South Korea’s second-biggest financial company, dropped 3.4 percent to 28,850 won. Oil, Copper “We are seeing some pullback following the recent rally as uncertainties remain,” said Michiya Tomita, a Hong Kong-based fund manager of Chinese stocks at Mitsubishi UFJ Asset Management Co., which oversees $61 billion. “We don’t know how big the loan-loss provisions of U.S. banks will be.” Westpac Banking Corp., Australia’s third largest, dropped 2.6 percent to A$19.74. The recession comment from Glenn Stevens, Governor of the Reserve Bank of Australia, today echo a similar statement by Prime Minister Kevin Rudd yesterday. BHP sank 3.3 percent to A$31.79. Fortescue Metals Group Ltd., Australia’s third-largest iron ore producer, slumped 7.3 percent to A$2.55. Crude oil for May delivery dived 8.8 percent to $45.88 a barrel in New York yesterday, the lowest settlement since March 11. Copper futures for July delivery slid 4.2 percent, the sharpest plunge since Feb. 17. Boart Longyear Ltd., which provides drilling services to mining companies, tumbled 17 percent to 14.5 Australian cents. The company said 2009 revenue may slump as much as 45 percent. Sony Downgrade Newcrest Mining Ltd., Australia’s largest gold producer, jumped 5.3 percent to A$29.31, tracking gains in the precious metal’s price. Zijin Mining Group Co., China’s largest gold producer, added 1.7 percent to HK$6 in Hong Kong. Mitsubishi, which owns a coal-mining venture with BHP, slumped 6.7 percent to 1,568 yen. Mitsubishi may have a 100 billion yen ($1.02 billion) drop in net income for the year to March 2010 because of falling prices for coking coal, the Nikkei newspaper reported today. Rivals Mitsui & Co. and Itochu Corp. may also see lower coal prices hurt their profits by 10 billion yen to 30 billion yen, Nikkei said. Mitsui dropped 7.3 percent to 1,105 yen. Itochu sank 6.2 percent to 543 yen. Sony lost 4.7 percent to 2,530 yen after Kota Ezawa, an analyst at Nikko Citigroup, downgraded the stock to “hold” from “buy.” The global recession means it will take time for investors to see “a real earnings recovery” at Tokyo-based Sony, Ezawa wrote in a report. Neptune Orient dropped 3.6 percent to S$1.35. The company was cut to “sell” from “neutral” at UBS AG.

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