Asian Stocks Fall, Extending Global Rout; Toyota, Nintendo Drop

By Kyung Bok Cho and Patrick Rial

Nov. 20 (Bloomberg) -- Asian stocks fell, extending a global rout, as U.S. consumer prices dropped by a record and Japan's exports declined the most in six years, adding to evidence a global recession is deepening.

Nintendo Co. lost more than 4 percent on concern demand is slumping in North America, where the company gets 40 percent of its sales. Toyota Motor Corp. slid 2.8 percent after a Japanese government report showed exports declined 7.7 percent last month. Commonwealth Bank of Australia slumped 4.4 percent after the nation's corporate bond risk approached a record.

``Concerns are rising that the U.S. is entering a period of deflation and that the economic picture is getting bleaker,'' Juichi Wako, a Tokyo-based strategist at Nomura Holdings Inc., said in an interview with Bloomberg Television. ``There's really no good news to hang on to today.''

The MSCI Asia Pacific Index fell 2.2 percent to 77.46 at 9:38 a.m. in Tokyo, dropping for a fourth day and heading for a 6.7 percent decline this week. Japan's Nikkei 225 Stock Average lost 4 percent to 7,939.67, while stocks also slumped in Australia and South Korea.

MSCI's Asian gauge has plunged 51 percent in 2008 as global financial institutions lost almost $1 trillion since the U.S. subprime-mortgage market collapsed last year. Growth in the Asia- Pacific region may expand in 2009 at less than half the pace of the previous two years, the Pacific Economic Cooperation Council said today.

Federal Reserve policy makers last month predicted the U.S. economy will contract through the middle of 2009, with some prepared to cut interest rates further in response, according to a record of their meeting released yesterday.

Commodities Fall

Futures on the U.S. Standard & Poor's 500 Index declined 0.2 percent. The S&P 500 tumbled 6.1 percent to 806.58 yesterday, while the Dow Jones Industrial Average fell below 8,000. Both measures closed at the lowest levels since March 2003. Europe's Dow Jones Stoxx 600 Index slipped 4 percent to 193.77 yesterday, the lowest level since May 2003.

U.S. consumer prices plunged 1 percent last month, the most since records began in 1947, while housing starts tumbled to an annual rate of 791,000, a record low. The onset of deflation can be devastating for an economy as consumers and businesses delay spending to benefit from lower prices.

Exports, the main engine of Japan's economic growth in the past six years, fell 7.7 percent from a year earlier, after rising 1.5 percent in September, the Finance Ministry said today in Tokyo.

Bond Risk

The Markit iTraxx Australia index of credit-default swaps was quoted 27.5 basis points higher at 345 as of 10:38 a.m. in Sydney, Citigroup Inc. data show. The gauge climbed to 389 basis points on Oct. 24, according to CMA Datavision. An increase means investor perceptions of credit quality is deteriorating.

Rio Tinto Group dropped 9 percent in Sydney as a weaker economic outlook prompted commodities to decline. A measure of six metals traded on the London Metal Exchange, including copper and zinc, fell 3.9 percent. Zinc dropped 3.7 percent, copper 4.3 percent and nickel 4.7 percent. Crude oil slumped to as low as $52.96, a level not seen since January 2007.

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