Asian Stocks Drop as European Crisis Talks Deadlocked

http://www.bloomberg.com/news/2012-09-24/asian-stocks-drop-as-european-crisis-talks-deadlocked.html

Asian Stocks Drop as European Crisis Talks Deadlocked

By Adam Haigh - Sep 24, 2012 10:39 AM GMT+0900

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Asian stocks fell amid concern that talks among European leaders to resolve the region’s debt crisis are deadlocked, curbing the earnings outlook for the region’s exporters.

Canon Inc. (7751), a Japanese camera maker that gets 30 percent of its sales in Europe, slid 4.2 percent. Rio Tinto Group, (RIO) the world’s third-largest mining company, retreated 2.4 percent as declining copper prices dragged raw-material shares lower. Newcrest Mining Ltd. (NCM), Australia’s biggest gold producer, slid 2.1 percent in Sydney as JPMorgan Chase & Co. downgraded its recommendation on the shares.

The MSCI Asia Pacific (MXAP) Index dropped 0.8 percent to 122.45 at 10:37 a.m. in Tokyo, with almost four stocks falling for each that rose. The gauge climbed 5.4 percent this quarter through last week as central banks from Europe, the U.S., Japan and China took action to stimulate economic growth.

“A period of consolidation in the month ahead looks the more likely outcome,” said George Boubouras, Melbourne-based head of investment strategy at UBS AG’s Australian wealth management unit. The Swiss bank has about $1.5 trillion in assets under management. “In Europe, there will continue to be some lingering challenges. As we approach the end of the quarter, investors will fine-tune and adjust their portfolios across all the asset classes. This will include some profit taking and portfolio rotation.”

Japan’s Nikkei 225 Stock Average (NKY) slid 0.8 percent and South Korea’s Kospi dropped 1.2 percent. Australia’s S&P/ASX 200 Index lost 0.7 percent. Hong Kong’s Hang Seng fell 1.1 percent and the Shanghai Composite retreated 0.9 percent. Singapore’s Straits Times slipped 0.6 percent and Taiwan’s Taiex declined 0.6 percent.

Annual Gain

The MSCI Asia Pacific index’s 8.5 percent advance in 2012 compares with a 16 percent increase on the Standard & Poor’s 500 Index through last week and a 13 percent jump on theStoxx Europe 600 Index. (SXXP) The Asian benchmark traded at 12.8 times estimated earnings compared with 14.1 for the S&P 500 and 12.2 for the Stoxx Europe 600 Index.

Last week, the MSCI Asia Pacific Index dropped 0.1 percent, halting a two-week advance, as an escalating territorial dispute between Japan and China and signs of a deeper economic slump overshadowed unexpected stimulus measures by the Bank of Japan.

Futures on the Standard & Poor’s 500 Index slid 0.2 percent today. Consumer spending in the U.S. probably stagnated in August after adjusting for inflation, showing the economic expansion is struggling to gain momentum, economists said before a report due Sept. 28.

Europe Deadlock

German Chancellor Angela Merkel and French President Francois Hollande underlined Franco-German disagreement over the weekend as they clashed on a timetable to introduce joint oversight of the region’s banking sector, with Merkel rebuffing Hollande’s appeal to activate it “the earlier, the better.”

China’s manufacturers and retailers are less optimistic about sales than they were three months ago and more companies are cutting jobs, according to a survey modeled on the U.S. Federal Reserve’s Beige Book.

The China Beige Book, through interviews of more than 2,000 company executives and bankers from Aug. 9 to Sept. 3, found limits to monetary easing after interest-rate cuts in June and July, with banks loosening credit while fewer companies are borrowing, according to a summary from CBB International LLC, the New York-based researcher that conducted the survey.

Copper for January-delivery declined 0.7 percent on the Shanghai Futures Exchange.