By Chen Shiyin and Kevin Cho
July 2 (Bloomberg) -- Asian stocks declined, led by airlines and shipping companies, after record oil prices drove up costs and curbed spending. Japan's Nikkei 225 Stock Average completed its longest losing streak in 43 years.
Cathay Pacific Airways Ltd., Hong Kong's largest airline, tumbled the most since October 2001 after saying earnings will be ``disappointing.'' Nippon Yusen K.K., Japan's biggest shipping line, fell on concern this year's 48 percent jump in oil will reduce trade. Toyota Motor Corp. retreated in Tokyo after its U.S. sales slumped 21 percent last month.
``Nobody wants to hold on to stocks right now,'' said Choi Min Jai, who helps manage about $5 billion at KTB Asset Management Co. in Seoul. ``The slowdown in the global economy is being felt. There is rising concern higher oil prices will mean higher inflation, which means lower demand.''
The MSCI Asia Pacific Index lost 1.3 percent to 134.13 at 4:52 p.m. in Tokyo, dropping for the ninth time in 10 days. Almost three stocks fell for each that gained, as all but one of the index's 10 industry groups declined.
Japan's Nikkei 225 sank 1.3 percent to 13,286.37, capping a 10 day, 8.1 percent slump. The retreat is the longest since 1965, when the Vietnam War was escalating, Japan was in a recession and the central bank had to bail out two brokerages.
MSCI's Asian index fell 13 percent in the first half of this year, the worst start since 1992. Concern that surging commodity prices will fuel inflation and derail growth today dragged the benchmark to the lowest since March, when turmoil in credit markets pushed up borrowing costs and led to the forced sale of Bear Stearns Cos. to JPMorgan Chase & Co.
In the U.S., futures on the Standard & Poor's 500 Index fell 0.1 percent.
Korea Stocks Drop
LG Electronics Inc. paced declines in South Korea after JPMorgan cut its share-price target. The Kospi Index lost 2.6 percent, the biggest slump since March 13 and the region's biggest drop. Korean Air Lines Co. plunged the most in 11 months after an analyst said the carrier may report a loss. The government said today economic growth will slow this year as inflation quickens to the fastest pace in a decade.
Cathay Pacific plummeted 7.1 percent to HK$13.80. The airline said the spot price for jet fuel is 93 percent higher than last year's average. Korean Air, the nation's largest, dropped 8.3 percent to 44,000 won, the most since Aug. 16. Korea Investment & Securities Co. said the company will likely post its first operating loss since 2003 because of fuel costs.[bn:WBTKR=QAN:AU]
Qantas Airways Ltd. [], Australia's biggest airline, dropped 2.8 percent to A$3.15 as oil climbed for a second day. Crude for August delivery rose as much as 1.1 percent to $142.45 a barrel in New York today, near June 30's record of $143.67.
Shipping Lines
Nippon Yusen dropped 4.6 percent to 981 yen. Mitsui O.S.K. Lines Ltd., Japan's second-largest shipping line by sales, fell 3.8 percent to 1,437 yen. STX Pan Ocean Co., South Korea's largest operator of vessels that transport coal, iron ore and other commodities, plunged 5.5 percent to 1,900 won.
The Baltic Dry Index, which tracks the price of shipping bulk commodities, declined 2.2 percent yesterday, the largest loss since June 23.
Finance ministers from the Group of Eight nations said last month surging food and fuel prices have replaced the credit squeeze as the biggest threat to the world economy. The Bank for International Settlements, which lends to central banks, said on June 30 interest rates should be raised globally to curb price rises.
``Inflation remains a very big threat to economic growth and earnings with the oil price at such high levels,'' said Nicole Sze, a Singapore-based investment analyst at Bank Julius Baer & Co., which manages $350 billion in assets worldwide. ``Equity markets are likely to remain choppy.''
Cheaper Stocks
MSCI's Asian index is valued at 14 times earnings, down from about 18 times at the start of 2008. China's CSI 300 Index has lost 50 percent this year, joining India and Vietnam among the world's 10 worst performing stock indexes, Bloomberg data shows.
Toyota, Japan's biggest carmaker, dropped 1.4 percent to 4,940 yen, its lowest close since April 16. North America accounts for a third of the company's total sales.
Vehicle sales plunged 18 percent in the U.S. last month, the steepest slump in almost six years. Honda Motor Co., Japan's second-largest automaker, lost 1.1 percent to 3,600 yen.
LG Electronics, Asia's second-largest mobile-phone maker, fell 4.6 percent to 114,500 won, its lowest close since March 26. JPMorgan cut its share-price forecast by 28 percent to 115,000 won, citing lower earnings prospects.
Just Group Ltd., Australia's biggest specialty clothing retailer, slumped 13 percent to A$2.78 in Sydney, the largest drop since May 2005. The company cut its full-year earnings forecast today.
BHP Billiton Ltd., the world's sixth-largest producer of primary aluminum, fell 3.4 percent to A$42.89 after Credit Suisse Group cut its earnings estimate for Alcoa Inc. and Century Aluminum Co. Analysts said profits will be hurt by higher energy and materials costs and a lower average price for the metal.
To contact the reporter for this story: Chen Shiyin in Singapore at schen37@bloomberg.net.
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