Asian Stocks Decline After Bailout Imperiled; Mitsui Slides

By Kyung Bok Cho and Patrick Rial

Sept. 26 (Bloomberg) -- Asian stocks fell for a fourth day after talks on a U.S. financial rescue plan stalled, Washington Mutual Inc. became the nation's biggest bank failure and shipping rates slumped the most in 23 years.

Shinhan Financial Group Ltd. fell 2.5 percent on concern the credit crisis is deepening after Republicans splintered over the proposed $700 billion bailout and WaMu was seized by regulators. Mitsui O.S.K. Lines Ltd., Japan's largest operator of dry-bulk ships, lost 3.8 percent.

``The assumption is that the bailout will take longer than expected, which is negative,'' said Tsuyoshi Shimizu, a senior fund manager at Mizuho Asset Management Co., which oversees $26 billion. ``The longer it takes to pass something, the more victims we're going to see.''

The MSCI Asia Pacific Index fell 0.2 percent to 114.58 at 11:16 a.m. in Tokyo, erasing an earlier 0.9 percent advance and paring this week's gain to 0.4 percent.

Japan's Nikkei 225 Stock Average lost 0.2 percent to 11,983.34. New Zealand's NZX 50 Index declined 0.4 percent after government data showed the economy contracted in the second quarter, driving the nation into its first recession in a decade.

Standard & Poor's 500 Index futures slid 1.2 percent in after-hours trading after U.S. Senate Banking Committee Chairman Christopher Dodd said the agreement he had reached with Republicans was undermined by a different proposal offered by a group of House Republicans led by Representative Eric Cantor.

If Treasury Secretary Henry Paulson backs Cantor's plan, negotiations would ``have to start all over again,'' Dodd said.

Banks Decline

The S&P 500 rose 2 percent yesterday as investors speculated Congress would agree on the $700 billion bailout of financial institutions to help revive credit markets.

Shinhan, which runs South Korea's third-largest bank, declined 2.5 percent to 42,900 won. Woori Finance Holdings Co., which controls the second biggest, slid 3.4 percent to 12,950 won.

JPMorgan Chase & Co. , the third-biggest U.S. bank by assets, agreed to pay $1.9 billion for the deposits of WaMu after the U.S. government closed Seattle-based Washington Mutual. WaMu had ``insufficient liquidity'' and was in an ``unsound'' condition, the Office of Thrift Supervision said in a statement.

Mitsui O.S.K. declined 3.8 percent to 972 yen. Hanjin Shipping Co., the largest South Korean shipping line, slipped 3.9 percent to 28,650 won.

The Baltic Dry Index lost 7.3 percent yesterday, bringing its three-day slide to 16 percent, the steepest decline since at least 1985, on weaker demand for steel from Chinese construction companies. The price to lease a capesize vessel has fallen 22 percent this week, according to the Baltic Exchange.

Takeda Pharmaceutical Co. gained 2.9 percent after announcing a $472 million share buyback.

To contact the reporter for this story: Kyung Bok Cho in Seoul at kcho7@bloomberg.net; Patrick Rial in Tokyo at prial@bloomberg.net