European shares fell from a five-year high and Japanese stocks led declines in Asia as technical gauges suggested rallies may falter. The euro slid to a six-week low before regional inflation data, while the Australian dollar dropped to an 11-month low. The Stoxx Europe 600 Index fell 0.1 percent at 8:01 a.m. in London, retreating from the highest close since June 2008. The MSCI Asia Pacific Index was down 0.3 percent. Japan’s Topix Index lost 0.6 percent, retreating from its highest close since August 2008. Standard & Poor’s 500 Index futures dropped less than 0.1 percent and the euro weakened 0.2 percent. Australia’s currency slipped 0.7 percent, while crude oil sank for the fifth time in six days. “The market, particularly in Japan, looks overbought and needs a pullback,� Nader Naeimi, Sydney-based head of dynamic asset allocation at AMP Capital Investors Ltd., which manages $126 billion, said by phone. “We’re not going to see a full reversal at this stage. The effects of aggressive monetary stimulus in Japan are just starting to gain traction.� Foreign direct investment in China unexpectedly slowed in April, fueling concern the economy is losing momentum, data showed. Japan’s gross domestic product grew the most in a year in the first quarter as consumer spending and exports climbed. The U.S., which is the world’s largest economy ahead of China and Japan, will report inflation figures today that may influence the outlook for monetary policy. Topix Slide About five stocks fell for every four that rose in the MSCI Asia Pacific Index, which is within 0.6 percent of a May 8 close that was the highest since June 2008. The measure gained 11 percent this year through yesterday, compared with a 16 percent rally for the S&P 500 and a 10 percent advance by the Stoxx Europe 600 Index. The Topix’s 14-day relative strength index, a measure of trading momentum, was at 77 yesterday, above the 70 threshold that signals to some traders a stock rally may reverse. A similar gauge for Stoxx Europe 600 Index was at 74. Japanese equities have risen “too much, too fast,� particularly financial stocks, and need “some kind of correction� before they can resume their climb, former Ministry of Finance official Eisuke Sakakibara said yesterday. Banks led declines among the Topix Index’s 33 industry groups after Mitsubishi UFJ and Sumitomo Mitsui Financial Group Inc. forecast lower earnings as monetary easing weighs on loan profitability. Mitsubishi UFJ lost 3.6 percent, Sumitomo Mitsui dropped 3 percent and Mizuho Financial Group Inc. slid 3.1 percent. Euro Inflation The euro slid for a sixth day, the longest losing streak in a year, to $1.2864 on speculation the European Central Bank will ease policy after data showed the euro-area economy extended its recession to a record sixth quarter. The currency touched $1.2843 yesterday, the weakest level since April 4. The region’s annual inflation rate dipped to 1.2 percent in April, the lowest since February 2010, from 1.7 percent the previous month, the European Union’s statistics office is forecast to confirm today. The rate has been below the ECB’s 2 percent ceiling since February. France and the U.K. are due to sell debt today. The Australian dollar touched 98.27 U.S. cents, the weakest since June 8. Signs of an economic slowdown in the U.S. and Europe have contributed to a five-day, 1.7 percent slide in the S&P GSCI Index of commodities, dimming the outlook for the South Pacific nation’s exports. Crude in New York was down 0.7 percent at $93.67 a barrel today. Aluminum for delivery in three months increased as much as 0.8 percent to $1,854.50 a metric ton on the London Metal Exchange, the biggest intra-day gain since May 8. United Co. Rusal, the world’s biggest aluminum producer, said output cuts announced by producers are “still not enough.� Silver gained 0.3 percent to $22.6595 an ounce, following a three-day, 5.3 percent decline. To contact the reporters on this story: Pratish Narayanan in Mumbai at pnarayanan9@bloomberg.net; Jonathan Burgos in Singapore at jburgos4@bloomberg.net To contact the editor responsible for this story: James Regan at jregan19@bloomberg.net

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