By Chua Kong Ho and Patrick Rial
July 29 (Bloomberg) -- Asian stocks fell to the lowest in more than a week after forecasts from Toyota Motor Corp. and Tokyo Electric Power Co. deepened concern that slowing economic growth and higher energy costs will hurt earnings.
Toyota, the world's largest automaker by market value, dropped as record U.S. gasoline prices eroded overseas sales and Japan's jobless rate unexpectedly rose. Tokyo Electric, Asia's biggest utility, declined the most in a week. Commonwealth Bank of Australia led financial companies lower after Merrill Lynch & Co. announced more writedowns and the International Monetary Fund said there is no end in sight to the U.S. housing slump.
``Company earnings globally are on a long downward trend as we adjust to the new realities,'' said Takashi Kamiya, who helps oversee $16 billion as chief economist at T&D Asset Management Co. in Tokyo. ``Banks and consumers overextended themselves in the housing bubble and now that is coming back to bite them.''
The MSCI Asia Pacific Index fell 1.8 percent to 130.61 as of 4:08 p.m. in Tokyo, set to close at the lowest since July 18. Six stocks retreated for each that rose. Financial stocks accounted for 36 percent of the index's decline.
Japan's Nikkei 225 Stock Average dropped 1.5 percent to 13,159.45. Shipping companies retreated, led by Nippon Yusen K.K. and Hanjin Shipping Co., after Lloyd's List said trade between Asia and Europe fell for the first time in seven years in June. All Asian markets declined except for Sri Lanka.
IMF Warning
In the U.S., the Standard & Poor's 500 Index dropped 1.9 percent yesterday after the IMF warned that worsening credit conditions may prolong the economic slowdown. Futures on the S&P 500 were little changed today.
MSCI's benchmark index for Asia has slumped 24 percent from its Nov. 1 record as financial institutions worldwide suffered $468.5 billion in writedowns and credit losses stemming from the collapse of the subprime mortgage market.
``At the moment, a bottom for the housing market is not visible,'' the IMF said in its Global Financial Stability Report, released yesterday in Washington. ``Stemming the decline in the U.S. housing market is necessary for market stabilization.''
Toyota sank for a third day, declining 2.7 percent to 4,750 yen. The company cut its forecast for worldwide vehicle sales this year by 350,000 units to 9.5 million, as it sold fewer trucks and sport-utility vehicles.
Honda Motor Co., Japan's second-largest automaker, declined 2.2 percent to 3,570 yen. The company lowered its full-year operating profit forecast last week.
``Things could get ugly,'' said Jonathan Ravelas, a strategist at Manila-based Banco de Oro Unibank Inc., which manages about $5.9 billion in assets. ``We could see more downside from here as corporate earnings are released.''
Profit Declines
Tokyo Electric fell 0.9 percent to 2,790 yen, after forecasting a record 280 billion yen ($2.6 billion) loss for the 12 months ending March 31, from a 150 billion yen loss a year earlier. Kansai Electric Power Co., Japan's second-biggest utility, declined 1 percent to 2,395 yen, after saying it may post a full-year loss of 55 billion yen, compared to its April 30 forecast for a 69 billion yen profit.
Commonwealth Bank of Australia, the nation's largest lender, sank 4.3 percent to A$39.33. Mitsubishi UFJ Financial Group Inc., Japan's largest bank by market value, slid 1.6 percent to 958 yen.
National Australia Bank Ltd., which last week raised its provisions for mortgage-related losses, slumped 4 percent to A$24.78. A planned A$850 million ($814 million) bond sale was cut to A$260 million after some investors pulled out, the bank said.
Financial stocks also fell after Merrill Lynch & Co. took steps to preserve its credit rating by selling $8.5 billion of stock and liquidating $30.6 billion of money-losing assets at a fifth of their original value. Merrill also said it will book $5.7 billion of writedowns in the third quarter.
Utilities, Shipping
``The financial crisis that started with the U.S. subprime problems will persist through the end of this year,'' said Park Hae Choon, president of South Korea's National Pension Service, the nation's largest investor with about $228 billion in assets. ``The troubles will spread to the real economy in 2009.''
Hanjin, South Korea's largest shipping line, plunged 6 percent to 35,850 won, the most since April 1. Nippon Yusen, Japan's biggest, dropped 3.7 percent to 920 yen. China Cosco Holdings Co., the world's largest operator of iron-ore and coal ships, tumbled 5.5 percent to HK$17.38.
Asia-Northern Europe container traffic declined 0.5 percent last month as European countries headed toward recession, Lloyd's List said, citing the Far Eastern Freight Conference. The Baltic Dry Index, a measure of commodity-shipping rates, fell for a 12th day to a three-month low.
DeNA, Alesco
DeNA Co., a Japanese auction and shopping Web site operator, slumped 15 percent to 589,000 yen in Tokyo, the biggest percentage decline on MSCI's Asian gauge. KBC Securities cut its rating on the stock to ``sell'' from ``hold.''
Alesco Corp., an Australian building materials and home products maker, tumbled 14 percent to A$6.75 in Sydney, the most since August 1990, after saying that matching its 2008 result in 2009 will be ``challenging.''
AU Optronics Corp., Taiwan's largest maker of liquid-crystal displays, fell 4.4 percent to NT$38.80. HSBC Holdings Plc cut its rating to ``neutral'' from ``overweight,'' and Daiwa Institute of Research lowered its price estimate by 34 percent.
To contact the reporter for this story: Chua Kong Ho in Shanghai at kchua6@bloomberg.net; Patrick Rial in Tokyo at prial@bloomberg.net
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