Tuesday, November 18, 2008

Asian Stocks Drop for Third Day; Banks, Woodside Lead Decline

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By Kyung Bok Cho

Asian stocks fell for a third day, led by financial companies and commodity producers, as Mitsubishi UFJ Financial Group Inc. reported lower profit and oil, gold and aluminum prices dropped.

Mitsubishi UFJ, Japan’s biggest bank, declined 5.5 percent after posting its lowest quarterly profit in at least four years. Babcock & Brown Ltd., the worst performing stock on the MSCI Pacific Index this year, plunged 21 percent in Sydney after saying it will accelerate jobs cuts to avoid defaulting on debt. The cheapest crude since January 2007 drove Woodside Petroleum Ltd. 5.3 percent lower, while BHP Billiton Ltd. slid 2.5 percent.

The MSCI Asia Pacific Index fell 0.6 percent to 79.39 at 10:50 a.m. in Tokyo, erasing an earlier gain of 0.6 percent. Financial stocks were the biggest contributor to the measure’s retreat. About two stocks dropped for each that rose.

Shares on the MSCI gauge are valued at 9.7 times trailing earnings and fell to 8.2 times last month, the lowest level since at least 1995, Bloomberg data shows. The index has halved in value this year as global financial institutions lost almost $1 trillion and cut about 166,000 jobs since the subprime-mortgage market collapse last year.

Japan’s Nikkei 225 Stock Average lost 1.3 percent to 8,224.50, extending a two-day 4.7 percent drop. All other Asian benchmark indexes retreated, apart from the Philippines and China.

Futures on the U.S. Standard & Poor’s 500 Index slipped 1.2 percent. The S&P 500 advanced 1 percent yesterday, gaining in the last hour of trading as energy and technology shares rallied.

Mitsubishi UFJ, Japan’s largest bank, dropped 5.5 percent to 516 yen. The company yesterday posted a 61 percent decline in quarterly profit on mounting losses from stockholdings and rising costs to get rid of bad loans.

Babcock, Woolworths

Mizuho Financial Group Inc., Japan’s second-biggest bank, slid 5.3 percent to 217,600 yen. Sumitomo Mitsui Financial Group Inc., the third largest, lost 5 percent to 324,000 yen. Sumitomo Mitsui is considering raising as much as 400 billion yen ($4.1 billion) by selling preferred securities this year, the Nikkei newspaper reported.

Woodside declined 5.3 percent to A$33.12. BHP, the world’s biggest mining company and Australia’s largest oil producer, slipped 2.5 percent to A$23.59, its lowest level since March 2006. Mitsubishi Corp., a Japanese trading company that gets half its profit from commodities, retreated 7.1 percent to 1,144 yen.

Crude oil lost 1 percent to $54.39 a barrel yesterday in New York. Gold fell for the second day, losing 1.3 percent to $732.70 an ounce, while aluminum slid to a three-year low in London.

Babcock, which has tumbled 99 percent this year, dropped 21 percent to 24.5 Australian cents. The company said it will reduce headcount by almost two-thirds while it renegotiates debt agreements with bankers.

Woolworths Ltd., Australia’s biggest retailer, declined 4.1 percent to A$25.17. The nation’s leading economic index fell in September, signaling it may slip into a recession, Westpac Banking Corp. and the Melbourne Institute said in Sydney today. That would end 17 straight years of economic expansion.

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