Asian Stocks Fall for a Third Day; BHP Declines on Oil, Metals

By Chen Shiyin and Shani Raja

Aug. 5 (Bloomberg) -- Asian stocks fell for a third day, led by commodity producers and financial companies, after raw- material prices slumped and HSBC Holdings Plc warned that profit growth from emerging markets will slow.

BHP Billiton Ltd., the world's largest mining company and Australia's No. 1 oil producer, dropped as copper plunged to the lowest level in six months and crude traded near $120 a barrel. China Steel Corp. fell in Taipei after the Commercial Times reported that demand will decline in China. HSBC, Europe's largest bank by market value, retreated the most in three weeks after reporting the steepest earnings decline since 2001.

``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 slipped 0.8 percent to 127.45 as of 1:25 p.m. in Tokyo, poised for the lowest close since September 2006. Measures tracking energy and mining companies had the biggest declines among the 10 industry groups in the benchmark index, which lost 2.9 percent the previous two days. China's CSI 300 Index fell 0.7 percent as trading slumped to a 19-month low yesterday.

Japan's Nikkei 225 Stock Average advanced 0.2 percent to 12,955.68, led by Canon Inc., the world's No. 1 digital-camera maker, and Toyota Motor Corp. on speculation lower energy costs will bolster consumer spending. Indexes retreated elsewhere in the region, except for the Philippines and India.

U.S. Stocks

U.S. stocks retreated yesterday, sending the Standard & Poor's 500 Index to its third straight day of losses. Consumer inflation rose 0.8 percent in June, the most since September 2005, and eroded consumers' buying power, the Commerce Department said. S&P 500 index futures rose 0.1 percent today.

HSBC's net income for the six months ended June 30 plunged 29 percent from a year earlier to $7.7 billion, the company said yesterday amid record U.S. subprime mortgage defaults. The outlook is ``highly challenging,'' Chairman Stephen Green said. The shares lost 2 percent to HK$126.80 in Hong Kong, set for the biggest drop since July 15.

BHP dropped 6.1 percent to A$36, on course for its largest decline since July 3 and the lowest close since March 31. Rio Tinto Group, the world's third-largest mining company, fell 5.5 percent to A$111.60. Jiangxi Copper Co., China's No. 2 producer of the metal, dropped 5 percent to HK$12.96 in Hong Kong.

Copper

Copper tumbled as much as 4.3 percent in New York to the lowest since Feb. 8, after inventories monitored by the London Metal Exchange reached a six-month high. Prices of aluminum, nickel and platinum also slipped.

China Steel plunged by the daily limit of 7 percent to NT$39.35 in Taipei, pacing a decline among Asian steelmakers. Demand for steel in China will probably drop this year because of increasing supply as well as a slowdown in the property market, Taipei-based Commercial Times said today, quoting a report from the China Iron and Steel Association.

JFE Holdings Inc., Japan's second-largest steelmaker, dropped 5.5 percent to 4,470 yen. BlueScope Steel Ltd., Australia's biggest, tumbled 6.3 percent to A$9.85.

`Keep Falling'

``The perception that the global economy is slowing is damping demand for commodities, sending prices down,'' said Park Sehick, a fund manager at Hanwha Investment Trust Management Co. in Seoul, which manages the equivalent of $1 billion in equities. ``Commodity prices haven't come down enough yet and will keep on falling.''

A gauge of 166 mining, farm and chemical companies on the MSCI World Index lost 3.3 percent yesterday, bringing the measure into a bear market. A gauge of 117 energy producers fell 3.1 percent, extending its retreat from a May record to 20 percent.

The MSCI Asia-Pacific Materials Index dropped 3.9 percent today, the biggest decline among the wider regional index's industry groups. It has slumped 31 percent since rising to a record high on Oct. 11.

Asian energy stocks fell 2.9 percent. Inpex Holdings Inc., Japan's largest oil explorer, tumbled 4 percent to 985,000 yen. Santos Ltd., Australia's third-biggest oil explorer, sank 5.7 percent to A$16.83. Cnooc Ltd., China's largest offshore oil explorer, slipped 5 percent to HK$10.94 in Hong Kong.

Crude oil for September delivery dropped 3 percent yesterday to $121.41, the lowest close since May 5. Futures fell 0.9 percent to $120.34 at 12:10 p.m. Tokyo time, 18 percent below the record high of $147.27 on July 11.

Bridgestone

Bridgestone Corp., the world's largest tiremaker, added 3.7 percent to 1,718 yen on expectations that falling oil prices will reduce the cost of synthetic rubber and other oil-based materials.

Canon, which gets three-quarters of its sales from outside Japan, gained 2.1 percent to 4,900 yen. Toyota rose 1.6 percent to 4,530 yen. The world's second-largest automaker generates about a third of its revenue from North America. Japanese exporters also gained as the U.S. dollar traded near a seven- month high against the yen, increasing the value of overseas sales.

Property stocks declined in China and Singapore. China Vanke Co., the country's largest publicly traded homebuilder, dropped 5 percent to 8.05 yuan after saying first-half profit growth slowed. Keppel Land Ltd., Singapore's No. 3 developer, retreated 4.1 percent to S$4.43, the lowest since September 2006, after UBS AG downgraded the shares, citing a more ``cautious outlook'' in Singapore, China and Vietnam.

Credit Saison Co. surged after the Nikkei newspaper reported that the company was in merger talks with Orix Corp. Credit Saison jumped 11 percent to 2,325 yen, the second-largest advance on MSCI's Asian index and the biggest gain since March 2001. Orix Corp. advanced 2.5 percent to 15,060 yen.

To contact the reporter for this story: Chen Shiyin in Singapore at schen37@bloomberg.net; Shani Raja in Sydney at sraja4@bloomberg.net