Asian stocks fell on growth concerns

Asian stocks fell, sending the MSCI Asia Pacific Index to a seven-week low, on speculation a U.S. economic recovery will be delayed. Taiwan’s Taiex Index had the biggest drop in a month on concern a China trade agreement will take longer than expected to negotiate.

Samsung Electronics Co., Asia’s biggest maker of computer- memory chips and flat screens, lost 2.8 percent in Seoul as a U.S. consumer sentiment index fell more than economists estimated. Cathay Financial Holding Co. sank 6.2 percent in Taipei after a government official said the island expects to sign an accord with China next year. Rio Tinto Group, the world’s third-largest mining company, fell 3 percent as metal prices dropped on July 10.

“We’re still very cautious,” said Diane Lin, a Sydney- based fund manager at Pengana Capital, which oversees about $1.9 billion. “The market did run ahead of itself. The data we’ve been seeing in the U.S. have not been as strong as the market had been hoping for.”

The MSCI Asia Pacific Index dropped 1.7 percent to 98.94 as of 12:39 p.m. in Tokyo, with seven stocks declining for each one that advanced. The gauge has lost 5.9 percent from an eight- month high on June 12 as optimism for a global economic recovery eased. The index had risen as much as 49 percent from a five- year low on March 9.

Japan’s Nikkei 225 Stock Average lost 1.3 percent, while South Korea’s Kospi Index sank 2.3 percent. Taiwan’s Taiex Index slumped 3.3 percent, its biggest drop since June 15.

Health-care stocks in the region gained, led by Daiichi Sankyo Co., which rose 3.1 percent after its anti-clotting drug was approved for sale in the U.S. Kirin Holdings Co., Japan’s biggest beverage maker, surged 8.4 percent after the Nikkei newspaper said the company may merge with Suntory Holdings Ltd.

Consumer Sentiment

Futures on the U.S. Standard & Poor’s 500 Index fell 0.5 percent. The measure dropped 0.4 percent on July 10 after the Reuters/University of Michigan preliminary index of consumer sentiment slid to 64.6 in July from the prior month. Economists had estimated the gauge would fall to 70.

“It’s going to be a while before we’re confident we’re going to have a strong, sustainable recovery in place,” U.S. Treasury Secretary Timothy Geithner said, according to a transcript of an interview with “CNN’s Fareed Zakaria GPS” show.

Samsung Electronics dropped 2.8 percent to 627,000 won in Seoul. Li & Fung Ltd., a Hong Kong trading company that sells goods to Wal-Mart Stores Inc. and Target Corp., sank 2.2 percent to HK$19.66. Taiwan Semiconductor Manufacturing Co., the world’s largest maker of customized chips, lost 2 percent to NT$55.

Economic Figures

Disappointing economic data, including worse-than-expected U.S. unemployment figures on July 2, has fanned investor concern that stock gains since March had outpaced prospects for an economic recovery.

Japan’s government said on July 8 that machinery orders declined 3 percent in May. Economists had estimated a 2 percent increase. Growth in Japanese bank lending slowed to 2.5 percent last month from a year earlier, compared with 3.3 percent growth in May, the Bank of Japan said on the same day.

“Investor sentiment is drifting because they can’t determine whether a recovery will be fast or slow,” said Yoshinori Nagano, a senior strategist at Tokyo-based Daiwa Asset Management Co., which oversees the equivalent of $90 billion.

Cathay Financial, Taiwan’s largest publicly traded financial services company, slumped 6.2 percent to NT$47.95. Fubon Financial Holding Co., the island’s second-largest listed financial services company, fell 5.9 percent to NT$31.05.

China, Taiwan Accord

The Taiex Index has gained 45 percent in the past six months on optimism closer ties with China will boost Taiwan’s economic growth.

Negotiations for an economic cooperation agreement with China should begin this year with the signing of a deal next year, Lai Shin-yuan, chairwoman of the Mainland Affairs Council, said in a statement on the council’s Web site yesterday.

Rio Tinto declined 3 percent to A$46.90. Cnooc Ltd., China’s largest offshore oil producer, lost 1.8 percent to HK$8.90 in Hong Kong. A gauge of six metals in London dropped 1.3 percent on July 10, posting a weekly loss of 3.9 percent, the most since the week ended April 24. Crude oil fell 0.9 percent to $59.89 a barrel in New York, the lowest since May 15.

Daiichi Sankyo gained 3.1 percent to 1,714 yen. Prasugrel, a drug developed by the company and its partner Eli Lilly & Co., was approved by the Food and Drug Administration on July 10 for sale in the U.S.

Kirin advanced 8.4 percent to 1,400 yen. and privately held Suntory are in merger talks, the Nikkei newspaper reported today. Hiroki Umezawa, a spokesman for Kirin, said the companies weren’t considering a merger at the moment.

Source: Bloomberg