Asian Stocks Fall for Second Week, Led by Commodity Producers

By Chua Kong Ho and Shani Raja

Aug. 9 (Bloomberg) -- Asian stocks fell for a second week, led by commodity producers, after prices of copper and oil declined on speculation slowing growth will curb demand.

BHP Billiton Ltd., the world's biggest mining company, dropped in Sydney. Mitsubishi UFJ Financial Group Inc. led Japanese banks lower after its profit declined and the government said the world's second-largest economy may be in a recession. Mitsui O.S.K. Lines Ltd. led shipping companies after a measure of marine freight fees slumped.

``Commodities prices have hit a choking point,'' said Nader Naeimi, a Sydney-based senior investment strategist at AMP Capital Investors, which manages about $108 billion. ``With further evidence of slowing growth there'll be ongoing pressure on mining and resources stocks.''

The MSCI Asia Pacific Index fell 2.7 percent to 127.11 this week, extending last week's 1.8 percent decline. Japan's Nikkei 225 Stock Average added 0.6 percent. Most other Asian markets declined.

China's CSI 300 Index retreated 8.8 percent, the biggest weekly decline since the five days ending June 13, on disappointment the government refrained from announcing measures to boost the market ahead of the Olympic Games, which began in Beijing yesterday.

MSCI's Asian gauge extended its decline this year to 19.4 percent, part of a rout that has erased more than $13 trillion from equities worldwide since October, as about $495 billion in writedowns and credit-related losses threaten to push the U.S. into recession.

Commodity Slump

BHP dropped 5 percent to A$37.15, while rival Rio Tinto Group lost 4.6 percent to A$116. Mitsui, which trades in commodities from energy to metals, declined 9.7 percent to 1,933 yen.

The Reuters/Jefferies CRB Index of 19 raw materials, including copper and oil, fell 6.9 percent this week, extending its biggest monthly loss in July since 1980. Oil fell 7.9 percent to settle at $115.20 a barrel, after reaching a record $147.27 a barrel on July 11.

Mitsubishi UFJ, Japan's largest bank by market value, dropped 9 percent to 845 yen, the biggest weekly decline this year, after posting a 66 percent drop in profit on rising costs related to bad loans. Sumitomo Mitsui Financial Group Inc., the second-largest Japanese bank, declined 10 percent to 702,000 yen, the most since the five days ended March 7.

Japan's Cabinet Office said on Aug. 7 the economy ``may be in a recession'' because of slower growth in the U.S. Bank lending stalled in Japan after accelerating for six months, the central bank said yesterday.

``There aren't many bullish companies left with the economic outlook so murky,'' said Naoteru Teraoka, who helps oversee $21 billion at Chuo Mitsui Asset Management Co. in Tokyo. ``We have yet to hit a real bottom.''

Mitsui O.S.K., the second-largest Japanese shipping company, dropped 12 percent to 1,200 yen. Nippon Yusen K.K., Japan's biggest shipping line, declined 7.9 percent to 845 yen. The Baltic Dry Index, a measure of commodity-shipping rates, dropped for a 20th day.

To contact the reporter for this story: Chua Kong Ho in Shanghai at kchua6@bloomberg.net; Shani Raja in Sydney at sraja4@bloomberg.net