Asian stocks slumped after reaching their highest since July 2008 and the dollar strengthened on speculation that the Federal Reserve may not provide enough monetary stimulus to sustain a recovery. Oil fell for a third day, the worst run in a month, while gold and metals also slid. The MSCI Asia Pacific Index fell 0.6 percent to 130.31 at 4 p.m. in Tokyo. Losing shares in the index beat gainers 580 to 346. The Stoxx Europe 600 decreased 0.2 percent. Standard & Poor’s 500 index futures slid 0.7 percent. Oil lost 0.8 percent to $80.60 a barrel as the Dollar Index advanced 0.3 percent. Federal Reserve Chairman Ben S. Bernanke said on Oct. 15 the central bank may expand asset purchases to reduce unemployment in the world’s largest economy, hurting the dollar last week. The U.S. currency gained against 15 of 16 major counterparts today. BHP Billiton Ltd. and Rio Tinto Group scrapped an iron-ore joint venture, citing regulatory concern. “Investors are in a wait-and-see mood as they look to see what’s coming in the way of policy stimulus in the U.S. and elsewhere,” said Stephen Halmarick, who helps manage about $135 billion as head of investment markets research at Colonial First State Global Asset Management in Sydney. “The data is mixed.” The MSCI Asia declined for a second day after peaking on Oct. 14 at 132.42. The Hang Seng Index and equity benchmarks in Taiwan and South Korea all dropped more than 1 percent. In Sydney, BHP Billiton slipped 1.1 percent after abandoning the plan with Rio Tinto to create the world’s largest iron-ore exporter following opposition from regulators in Europe and Asia. Rio retreated 0.3 percent. Gold Slips Newcrest Mining Ltd., Australia’s largest gold producer, slumped 2.7 percent as gold futures fell for a second day. The stock has advanced 16 percent this year as the metal rose to a record last week. “Gold is off the peak,” Darren Heathcote, head of trading at Investec Bank (Australia) Ltd., said by phone from Sydney. “For the time being we are just waiting for more significant data and further rhetoric from the Fed.” Australian asset manager Perpetual Ltd. soared 22 percent after a takeover offer from Kohlberg Kravis Roberts & Co., the New York-based private-equity firm, for as much as A$1.75 billion ($1.73 billion). HSBC Holdings Plc led banks lower in Hong Kong, dropping as much as 2.2 percent. ‘Money Pulls Out’ “In a volatile market, funds tend to make their way into the financial sector so once a correction takes place, money pulls out first from this sector,” said Castor Pang, research director at Cinda International Holdings Ltd. The yen rose against all 16 of its major peers on speculation Japan will refrain from intervening to weaken its currency ahead of this week’s meeting policy makers from Group of 20 nations. The yen was at 81.21 per dollar in Tokyo from 81.45 in New York on Oct. 15 when it touched 80.88, the strongest level since April 1995. The Australian and New Zealand dollars fell on the speculation that the Fed may add less monetary stimulus than expected. New Zealand’s currency declined for a third day to 75.11 U.S. cents, while the Aussie dropped to 98.43 U.S. cents. “Markets appear to have priced in around $1 trillion in terms of quantitative easing from the Fed, so it’s difficult to see what is going to deliver further substantial U.S. dollar weakness,” said Mike Jones, a strategist at Bank of New Zealand Ltd. in Wellington. U.S. central bank officials including Atlanta Fed President Dennis Lockhart and Chicago Fed President Charles Evans are scheduled to speak on the economy this week. Weaker Euro The euro fell to $1.3874 from $1.3977 on Oct. 15 when it reached $1.4159, the most since Jan. 26. The ZEW Center for European Economic Research in Mannheim, Germany will say its index of investor and analyst expectations, due for release tomorrow, dropped to minus 7 in October, the least since January 2009, according to a Bloomberg survey. Oil declined for a third day in New York as the dollar gained against the euro, curbing the appeal of commodities as an alternative investment. The November contract dropped on the New York Mercantile Exchange, the longest pullback since a four-day drop through Sept. 17. Gold for immediate delivery fell for a second day after reaching a record last week, the first two-day drop in more than a month. The precious metal, which typically trades inversely to the dollar, lost as much as 0.9 percent to $1,356.41 an ounce. Industrial metals declined as the dollar rallied. Nickel for three-month delivery dropped for a third day on the London Metal Exchange, tumbling as much as 1.4 percent to $23,710 a metric ton, while copper lost as much as 1 percent to $8,315.75 a ton. Zinc, tin, aluminum and lead also fell. The cost of protecting Asia-Pacific corporate and sovereign bonds from non-payment rose, according to traders of credit- default swaps. The Markit iTraxx Asia index of 50 investment- grade borrowers outside Japan increased two basis points to 105 basis points. To contact the reporter for this story: Jake Lloyd-Smith in Singapore at jlloydsmith@bloomberg.net To contact the editor responsible for this story: Patrick Chu in Tokyo at pachu@bloomberg.net

Source