Asian Stocks Fall, Snapping Record Rally, on Earnings, Metals

By Kyung Bok Cho and Motoko Kakizaki
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Oct. 31 (Bloomberg) -- Asian stocks fell, adding to the regional benchmark index's worst month ever, as a record three- day rally fizzled after companies slashed profit forecasts and metals prices tumbled.

Mazda Motor Corp. fell 13 percent and Pioneer Corp. lost 14 percent after projecting lower earnings. KB Financial Group Inc. fell 6.7 percent in Seoul after unit Kookmin Bank reported a worse-than-expected profit decline. BHP Billiton Ltd., the world's biggest mining company, slid 4 percent after stockpiles of metals jumped.

``Yesterday's rally was too good to be true,'' Soichiro Monji, chief strategist at Tokyo-based Daiwa SB Investments Ltd., which manages about $53 billion, said in an interview with Bloomberg Television. ``Investors are very likely to take this chance to lock in profits.''

The MSCI Asia Pacific Index retreated 2 percent to 86.48 as of 11:07 a.m. in Tokyo. The gauge jumped 17 percent in the previous three days as the U.S. and China cut interest rates and the Federal Reserve agreed to provide emerging markets with $120 billion. It's set to lose 19 percent this month, the most in the measure's 21-year history.

Japan's Nikkei 225 Stock Average lost 2.4 percent to 8,811.80, snapping a three-day, 26 percent advance that was the biggest since at least 1970. South Korea's Kospi index rose 1.3 percent, extending yesterday's record climb of 12 percent.

Forecasts Cut

Futures on the U.S. Standard & Poor's 500 Index slipped 1 percent today. U.S. stocks gained yesterday, with the S&P 500 advancing 2.6 percent to 954.09, after gross domestic product contracted less than economists had estimated.

Mazda Motor Corp., which surged 50 percent in the previous three days, fell 13 percent to 214 yen in Tokyo. The company cut its profit forecast by 29 percent yesterday on falling U.S. sales and higher raw materials costs.

Toyota Motor Corp., Japan's biggest automaker, lost 3.9 percent to 3,750 yen. Honda Motor Co., the second largest, retreated 6.2 percent to 2,590 yen.

Pioneer Corp., a Japanese electronics maker, slipped 14 percent to 289 yen after widening its net loss forecast yesterday and replacing its president. Konica Minolta Holdings Inc., a Japanese maker of printers, fell 10 percent to 647 yen after cutting its full-year profit forecast by 40 percent on the higher yen.

The yen gained 0.4 percent against the dollar to 98.18 and rose for the first time in four days against the euro, adding 1.5 percent to 125.45. A stronger yen erodes the value of overseas earnings when repatriated, and led Canon Inc. and Sony Corp. to cut their profit forecasts earlier this month.

Metals Fall

KB Financial Group Inc., which owns South Korea's biggest bank, dropped 6.7 percent to 32,650 won. Kookmin posted a 29 percent drop in net income yesterday.

BHP, Australia's biggest oil producer, slid 4 percent to A$27.45. Rio Tinto Group, the third biggest miner, retreated 3.1 percent to A$74.90.

An index of six metals traded on the London Metal Exchange fell 7.8 percent yesterday, the biggest decline since October 2004. Crude oil dropped 2.3 percent to $65.96 a barrel in New York, and is poised for its biggest monthly drop since trading began in 1983 on concern a U.S. recession will further curb fuel demand.

To contact the reporter for this story: Kyung Bok Cho in Seoul at kcho7@bloomberg.net; Motoko Kakizaki in Tokyo at mkakizaki@bloomberg.net.