BLBG; Asia Stocks, Metals Drop on Housing Starts; Yen Gains on Spain
By James Poole and Masaki Kondo
June 17 (Bloomberg) -- Asian stocks dropped for the first time in six days and metals fell after U.S. housing starts plunged the most in more than a year. The yen gained as Spain’s plan to publish bank stress tests renewed European debt concern.
The MSCI Asia Pacific Index declined 0.3 percent to 115.43 at 3:20 p.m. in Tokyo after five consecutive gains that pushed the gauge to a four-week high. Copper dived 2.3 percent to $6,500 a metric ton, down for a second day. The yen rose 0.5 percent against the euro, and strengthened against all 16 major rivals. Standard & Poor’s 500 Index futures fell 0.4 percent and those for the Euro Stoxx 50 decreased 0.1 percent.
Housing starts slumped 10 percent, the biggest decline since March 2009, according to figures from the Commerce Department. European Union leaders may agree on ways to tighten financial-market regulation at a summit meeting today and Spain’s central bank said yesterday it plans to publish the results of stress tests carried out on the nation’s lenders to counter speculation it needs international aid.
“Investors are inclined to book profit,” said Mitsushige Akino, who oversees $450 million at Tokyo-based Ichiyoshi Investment Management Co. Uncertainty “and a loss of confidence have driven down the market even though the global economy remains resilient.”
The MSCI Asia Pacific Index has lost 4.2 percent this year on concern that Greece and other European countries will struggle to curb their budget deficits. The Hong Kong and Taiwan markets reopened after a holiday and Chinese stocks resumed trading after a three-day break.
Japan, Australia
Japan’s Nikkei 225 Stock Average declined 0.6 percent. Australia’s S&P/ASX 200 Index lost 0.8 percent.
Toyota Motor Corp., which gets 28 percent of sales from North America, declined 1.1 percent in Tokyo. James Hardie Industries SE, the biggest seller of home siding in the U.S., lost 4.1 percent in Sydney. BHP Billiton Ltd., the world’s biggest mining company, slipped 1.4 percent in Australia after oil and metal prices slumped.
The yen strengthened on speculation European Union leaders will agree on ways to tighten financial-market regulation. The euro weakened for a second day versus the dollar after Spain’s central bank said yesterday it plans to publish stress tests.
‘More Rules’
“The EU heads may call for more rules, which may weigh on growth,” said Tsutomu Soma, a bond and currency dealer at Okasan Securities Co. in Tokyo. “Risk aversion may persist, so the yen and the dollar could be bought.”
The yen climbed to 112.07 per euro in Tokyo from 112.56 in New York yesterday, when it fell to 113.32, the weakest level since June 4. The currency rose to 91.32 versus the greenback from 91.44, and gained 0.6 percent to 78.53 per Australian dollar. The euro declined to $1.2272 from $1.2311.
The EU summit today will discuss the region’s economic growth and the so-called stability and growth pact. The Bank of Spain plans to make the stress tests public so markets have full knowledge of the state of the banking system, Miguel Angel Fernandez Ordonez, the governor, said yesterday in a speech.
South Korea’s won slid 0.4 percent to 1,215.90 per dollar and Malaysia’s ringgit retreated 0.4 percent to 3.2735 on concern Europe’s debt crisis will bolster demand for dollars.
‘Flight to Quality’
“Should the European debt crisis worsen, you will see the flight to quality for the dollar and that will weigh on the Asian currencies,” said Yeo Chin Tiong, head of treasury at OSK Investment Bank Bhd. in Kuala Lumpur.
Oil fell from a six-week high after a government report showed U.S. crude supplies increased last week as refiners cut processing rates. Crude oil for July delivery dropped 71 cents, or 0.9 percent, to $76.96 a barrel in electronic trading on the New York Mercantile Exchange.
The cost of protecting Asia-Pacific corporate and sovereign bonds from non-payment fell, according to traders of credit- default swaps. The Markit iTraxx Japan index declined 2 basis points to 135 basis points in Tokyo, according to Morgan Stanley. The Markit iTraxx Asia index of 50 investment-grade borrowers outside Japan fell 2 basis points to 131 basis points in Singapore, Royal Bank of Scotland Group Plc prices show.
To contact the reporters for this story: Masaki Kondo in Tokyo at mkondo3@bloomberg.net. James Poole at jpoole4@bloomberg.net
