Asian Stocks Fall; Chinese Shares Tumble Hours Before Olympics

By Patrick Rial

Aug. 8 (Bloomberg) -- Asian stocks declined, set for a second weekly drop, as Chinese equities plunged on concern security breaches could disrupt the Olympic Games set to open in Beijing tonight.

China Cosco Holdings Co., the world's largest operator of iron-ore and coal hauling ships, fell the most in more than six months on concern a slowdown in the U.S. is curbing demand for Asian-made products. Mitsubishi UFJ Financial Group Inc. capped its worst week of the year as lending growth stalled in Japan.

The MSCI Asia Pacific Index lost 0.6 percent to 127.25 as of 4:21 p.m. in Tokyo. For the week, the gauge has dropped 2.6 percent. Japan's Nikkei 225 Stock Average advanced 0.3 percent to 13,168.41. China's benchmark CSI 300 Index tumbled 4.7 percent. More than half of the region's indexes retreated.

``There have been a bit of rumors about security threats at the Games since the noon trading break,'' said Peter Pak, a Hong Kong-based strategist at BOCI Securities Ltd. ``So far nobody is able to substantiate a threat.''

Citic Securities Co., the brokerage unit of China's largest investment company, slumped as the value of shares traded on China's two principal exchanges dropped to the lowest level since December 2006.

``Everyone's focused on the Olympic Games, not the stock market,'' said Fan Dizhao, a Shanghai-based analyst at Guotai Asset Management Co., which oversees the equivalent of $7 billion.

China Cosco dropped 11 percent to HK$13.90.

U.S. stocks fell the most in a week yesterday, with the Standard & Poor's 500 Index losing 1.8 percent. American International Group Inc. plunged the most since listing in 1969 after reporting an unexpected loss, while Wal-Mart Stores Inc., the world's largest retailer, dropped after saying sales are likely to slow. S&P 500 futures for September rose 0.3 percent.

To contact the reporter for this story: Patrick Rial in Tokyo at prial@bloomberg.net