Asian Stocks Post Weekly Drop on Earnings Concern; Toyota Falls

By [bn:PRSN=1] Kyung Bok Cho []

Aug. 2 (Bloomberg) -- Asian stocks fell this week after Toyota Motor Corp. forecast lower sales and Australia & New Zealand Banking Group Ltd. said bad loans will erode profit, deepening concern slowing economic growth will dent earnings.

Toyota, the world's biggest automaker by market value, slid after it cut its sales projection on cooling demand. ANZ, Australia's fourth-largest bank, declined after saying full-year profit will drop by the most since 1992. Neptune Orient Lines Ltd. retreated after Lloyd's List said trade between Asia and Europe fell for the first time in seven years in June.

``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.''

The MSCI Asia Pacific Index dropped 1.8 percent to 130.63. Japan's Nikkei 225 Stock Average lost 1.8 percent. Most benchmark indexes across the region declined.

Toyota slipped 6.7 percent to 4,610 yen. The company said it expects to sell 9.5 million vehicles globally this year, down 3.6 percent from its initial estimate of 9.85 million. Record U.S. gasoline prices prompted Toyota to cut its sales forecasts for the Toyota and Lexus brands by 7.6 percent.

ANZ lost 8.9 percent to A$16.17. The bank said earnings per share may fall 20 percent to 25 percent in the 12 months to Sept. 30, as it tripled provisions for delinquent loans from a year earlier.

`Long Downward Trend'

National Australia Bank Ltd., which raised its provisions for mortgage-related losses on July 25, slumped 8.4 percent to A$24.34. A planned A$850 million ($814 million) bond sale was cut to A$260 million after some investors pulled out, the bank said.

``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.''

Separately in the U.S., the Commerce Department said the world's largest economy contracted in the fourth quarter of last year, compared with an earlier figure that showed an expansion. Gross domestic product grew at a 1.9 percent annualized pace in the second quarter, less than economists expected.

Neptune Orient, Southeast Asia's largest container-shipping company, lost 3.2 percent to S$2.75. Hanjin Shipping Co., South Korea's largest shipping line, plunged 14 percent to 33,000 won.

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.

To contact the reporter for this story: Kyung Bok Cho in Seoul at kcho7@bloomberg.net