Asian Stocks Fall for Second Day on Oil Drop, Toyota Target Cut

By Chua Kong Ho and Masaki Kondo

Nov. 7 (Bloomberg) -- Asian stocks fell for a second day after prices for copper and crude oil tumbled and Toyota Motor Corp. slashed its profit target.

BHP Billiton Ltd., the world's biggest mining company, sank 7.4 percent in Sydney as a measure of metals prices slumped the most in a week. Woodside Petroleum Ltd. dropped 6.4 percent as oil traded near a 19-month low. Toyota, the world's second- biggest automaker, is poised to fall after predicting the smallest profit in nine years and as a report showed Americans on unemployment benefits jumped to a 25-year high.

``We expected the global economy would weaken, but it's deteriorating much faster than we feared,'' Soichiro Monji, chief strategist at Tokyo-based Daiwa SB Investments Ltd., which manages about $53 billion, said in an interview with Bloomberg Television. ``I didn't imagine Toyota would be forced to lower its earnings forecast by this degree.''

The MSCI Asia Pacific Index declined 3.4 percent to 85.65 as of 9:40 a.m. in Tokyo, adding to yesterday's 6 percent decline. The index gained 9.8 percent in the first three days of this week before the rally fizzled as optimism president-elect Barack Obama will introduce measures to bolster the economy gave way to concern corporate profits were falling quicker than expected.

Japan's Nikkei 225 Stock Average fell 5 percent to 8,453.67. Australia's S&P/ASX 200 Index slumped 3.8 percent, while South Korea's Kospi Index retreated 3.6 percent. The Bank of Korea today cut interest rates by 25 basis points, the third reduction in a month.

Jobless Claims

In New York, the Standard & Poor's 500 Index slumped 5 percent, posting the biggest two-day drop since 1987, after jobless claims jumped and the shrinking economy crushed earnings at companies from Blackstone Group Inc. to News Corp.

Toyota more than halved its annual profit forecast yesterday, expecting a 68 percent drop from a year earlier. Tighter credit and worsening consumer sentiment drove industry-wide U.S. sales last month to the lowest level since 1991. Meanwhile, the yen's 12 percent gain against the dollar and 24 percent appreciation versus the euro this year are squeezing profit at Toyota and other Japanese exporters.

``Yen strength was exacerbated by declines in unit sales and in North American production,'' Tatsuo Yoshida, an analyst for UBS AG, wrote in a report yesterday. He slashed his rating on Toyota to ``neutral'' from ``buy.''

The Labor Department said U.S. workers receiving unemployment-insurance checks totaled 3.843 million in the week ended Oct. 25, the highest level since 1983. The report foreshadowed a surge in the jobless rate when the department releases its October jobs report later today.

Commodities Decline

The worsening economic outlook diminished prospects for commodities demand. Crude oil for December delivery fell 6.9 percent to $60.77 a barrel in New York, the lowest settlement since March 2007, while copper futures for December delivery slid 5.1 percent, extending a two-day slump to 12 percent.

BHP Billiton fell 7.4 percent to A$27.03. Rio Tinto Group, the world's third-biggest mining company, sank 9.8 percent to A$71.28. Nippon Mining Holdings Inc. dropped 10 percent to 263 yen. Woodside Petroleum slid 6.2 percent to A$40.04.

European central banks lowered lending rates to curb an economic slowdown, led by the Bank of England's cuts of 1.5 percentage points to the lowest level since 1955. The European Central Bank reduced its rate by 50 basis points and Swiss policy makers cut by the same margin.

The yen appreciated against the euro to as much as 123.44 from 126.07 at the close of stock trading in Tokyo yesterday.

To contact the reporter for this story: Chua Kong Ho in Shanghai at Kchua6@bloomberg.net; Masaki Kondo in Tokyo at mkondo3@bloomberg.net.