India Cuts Rates Unexpectedly While Japan Initiates New Bonds Sale

Daily Forex Fundamentals | Written by ecPulse.com | Apr 21 09 09:28 GMT |

Opposing all market expectations, the Reserve Bank of India shocked markets after cutting rates for the sixth consecutive time taking the reverse repurchase rates down to a record low of 3.25 percent from 3.5 percent in an attempt to stimulate growth in Asia's third largest economy as it is now expected to slow down at the weakest pace since 2003 to reach 6 percent. The repurchase rate was also cut by 25 basis points to 4.75 percent yet the cash reserve ratio was unchanged at 5 percent. It's a quite difficult time for the economy as they fail to increase spending during a time of elections. The government can't afford to increase spending and has failed to encourage lending at the same time which continues to place downside pressures to growth. Several sectors are still contracting and facing the impact of the global recession as exports collapsed to a record low in March, marking the longest decline in ten years whereas industrial production had fallen 1.2 percent during February. According to the Bank governor, the central bank in a statement today said that it will use 'a combination of monetary and debt-management tools' to help the economy as well as provide the financial system with 1.2 trillion rupees in the six months starting April through the purchase of government bonds and market stabilization bonds in an attempt to halt further borrowings from the government that have reached 4.35 trillion rupees so far. In addition, it seems like he's placing bets that the climate in the nation will be able to help spur consumer demand and pick up growth as rain may result in the boost of farm output. Elsewhere in the region, Governor Glenn Stevens of the Reserve Bank of Australia said that despite the economy had slid into the first recession in eighteen years, he still believes that the stimulus package created alongside the well developed banking system and China's performance will be sufficient to help the economy rebound and climb out of the slump. Prime Minister Kevin Rudd also said today that he may introduce a new stimulus package by May 12 different from the A$90 billion that has been previously introduced last October. The economy had contracted 0.5 percent during the last quarter yet many believe the fact that the economy will as a matter of fact rebound after signs of global economic recovery has emerged. Stevens said that in Australia 'public finances remain in very sound shape, with modest debt levels and a medium-term path for the budget back towards balance.' Finally, the Finance Minister Kaoru Yosano stated earlier today that the government is to sell 10.8 trillion yen worth of new bonds to help support the stimulus package. The 10.8 trillion will be separated to 7.3 trillion yen in construction bonds and 3.5 trillion yen in deficit-covering bonds. Unfortunately the main problem they face will be their public debt which was already 170 percent of GDP which is expected by the Organization for Economic Cooperation and Development to reach as high as 197 percent in the upcoming year Asian stock indices reacted negatively today as they retreated on growth concerns and mounting banking losses. The MSCI Asia pacific index retreated 1.8 percent at 5:21 p.m. to reach 88.37 points whereas the Nikkei 225 stock average slumped 2.4 percent, Hang Seng fell 3 percent and the S&P/ASX200 also fell 2.4 percent. Ecpulse disclaimer: The content of ecPulse.com and any page in the website contain information for investors/traders and is not a recommendation to buy or sell currencies, stocks, gold, silver & energies, nor an offer to buy or sell currencies, stocks, gold, silver & energies. The information provided reflects the writers' opinions that deemed reliable but is not guaranteed as to accuracy or completeness. ecPulse is not liable for any losses or damages, monetary or otherwise that result. I recommend that anyone trades currencies, stocks, gold, silver & energies should do so with caution and consult with a broker before doing so. Prior performance may not be indicative of future performance. Currencies, stocks gold, silver &energies presented should be considered speculative with a high degree of volatility and risk

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Daily FX Report

Daily Forex Technicals | Written by Varengold Bank | Apr 21 09 09:13 GMT |

Good morning from wonderful Hamburg. Unfortunately, it seems that the bad news around the world about the financial crisis could appoint the markets again. However, we wish you a prosperous trading day Markets review The GBP fell against the JPY, the USD and the CHF as the index for Bank shares, the FTSE 350 Banks Index, dropped 5.3 %. Yesterday the GBP/JPY declined 3.02 % from 146.76 to 142.32 at its closing. As well the Confederation of British Industry lowered its forecast for the U.K. economy and expects a contract of 3.9 % in 2009. The USD rose versus the EUR near to a five-week high on concerns that the global recession could worsen. So it boosted demand for the USD as a refuge. The EUR/USD traded at 1.2888 at its lowest point from 1.3049 at its opening. Since the middle of March the EUR traded close to the weakest level against the JPY on speculation the ECB will lower its key interest rate. 'In this environment, the dollar and the yen are likely to be bought as safe-haven currencies' said Yuji Saito, head of the foreignexchange group in Tokyo at Societe Generale SA. The CAD declined to the lowest level in more than a week as stocks and crude oil tumbled and the Bank of Canada prepared to make a decision on interest rates and issue a report on monetary policy today. The EUR/CAD rose 1.14 % from 1.5828 at its opening to 1.6009 at its closing. Technical analysis GBP/CHF Since the beginning of April, the currency pair has been trading in a bullish trend-channel and climbed over the 1.7200 level. Yesterday the GBP/CHF crossed within two 120- minutes candlesticks its trend-channel and lost this support. It seems that the currency pair would test its next support at 1.6930 but a lot of dojis at least could be a sign for a new trend-reversal. USD/CAD The USD/CAD traded within the first half of April in a bearish trend-channel and fell at the inflection point under the 1.2000 level. After touching a year low, the currency pair started a strong bullish movement and left the trendchannel, crossed its resistance at 1.2308 again and tested the 1.2400 barrier. Though the RSI shows a strong overbought market and demonstrate the risk on the downside. Pivot Points - Daily FX Support and Resistance Levels Daily Calendar & Key FX Events Varengold Bank IMPORTANT NOTIFICATION TO BE READ IN CONJUNCTION WITH THE CONTENTS OF THIS DOCUMENT This document is issued and approved by Varengold WPH Bank AG. The document is only intended for market counterparties and intermediate customers who are expected to make their own investment decisions without undue reliance on the information set out within the document. It may not be reproduced or further distributed, in whole or in part, for any purpose. Due to international laws/regulations not all financial instruments/services may be available to all clients. You should have informed yourself about and observe any such restrictions when considering a potential investment decision. This electronic communication and its contents are intended for the recipient only and may contain confidential, non public and/or privileged information. If you have received this electronic communication in error, please advise the sender immediately, and delete it from your system (if permitted by law). Varengold does not warrant the accuracy, completeness or correctness of any information herein or the appropriateness of any transaction. Nothing herein shall be construed as a recommendation or solicitation to purchase or sell any financial product. This communication is for informational urposes only. Any market or other views expressed herein are those of the sender only as of the date indicated and not of Varengold. Varengold reserves the right to consider any order sent electronically as not received unless it is confirmed verbally or through other means.

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Forex Technical Analysis

Daily Forex Technicals | Written by DeltaStock Inc. | Apr 21 09 08:17 GMT |

EUR/USD Current level-1.2921 EUR/USD is in a broad consolidation, after bottoming at 1.2331 (Oct.28,2008). Technical indicators are neutral, and trading is situated between the 50- and 200-Day SMA, currently projected at 1.2951 and 1.3834. The pair reached our first target at 1.2942 and after brief consolidation we will expect continuation of the downtrend, towards 1.2738 and 1.2578. First resistance on the upside is 1.3092, followed by the crucial 1.3383 Resistance Support intraday intraweek intraday intraweek 1.3092 1.3582 1.2867 1.2576 1.3390 1.3740 1.2738 1.2328 USD/JPY Current level - 98.11 A short-term bottom has been set at 87.12 and a large consolidation is unfolding since. Trading is situated between the 50- and 200-day SMA, currently projected at 94.12 and 99.36. The downtrend is intact with nearest resistance at 98.52, followed by the crucial 99.75. Further drowning is to be expected, towards 95.83 and 93.58 Resistance Support intraday intraweek intraday intraweek 98.52 102.16 97.76 93.38 99.75 103.55 96.01 89.82 GBP/USD Current level- 1.4518 The pair is in a corrective phase, after bottoming at 1.3506. Trading is situated between the 50- and 200-day SMA, currently projected at 1.4259 and 1.6470. As expected, the downtrend from 1.5065 broke through 1.4583 support and is aiming at 1.4111 and 1.38+. Current consolidation is expected to be limited below 1.4583-4603. Resistance Support intraday intraweek intraday intraweek 1.4582 1.5065 1.4467 1.4107 1.4735 1.5727 1.4582 1.30+ DeltaStock Inc. - Online Forex & Securities Broker www.deltastock.com RISK DISCLAIMER: These analyses are for information purposes only. They DO NOT post a BUY or SELL recommendation for any of the financial instruments herein analyzed. The information is obtained from generally accessible data sources. The forecasts made are based on technical analysis. However, Delta Stock’s Analyst Dept. also takes into consideration a number of fundamental and macroeconomic factors, which we believe impact the price moves of the observed instruments. Delta Stock Inc. assumes no responsibility for errors, inaccuracies or omissions in these materials, nor shall it be liable for damages arising out of any person's reliance upon the information on this page. Delta Stock Inc. shall not be liable for any special, indirect, incidental, or consequential damages, including without limitation, losses or unrealized gains that may result. Any information is subject to change without notice.

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US Equities Plunge, USD Bounces

by Korman Tam

The dollar and the yen strengthened against the majors at the start of the week on the heels of risk-averse buying. A steep sell-off in the European and US equity bourses prompted heavy demand in the safe-haven currencies, which dragged the euro lower beneath the 1.29-level versus the dollar toward the 126-region against the yen.

The major US equity indexes were all lower by over 3% in the afternoon session, with the S&P 500 plunging by 3.77%, the Nasdaq down by 3.53% and the Dow Jones lower by 3.1%. Given the sharp run-up in US equities over the recent weeks, traders took profits despite a strong earnings report from Bank of America – which posted a $4.2 billion first quarter profit and tripling from the previous quarter. The catalyst for renewed fears in the financial sector were revelations that BofA needed to bolster its reserves amid burgeoning losses stemming from commercial real estate, consumer and credit card debt.

The economic calendar in the week ahead consists of February home prices, weekly jobless claims, March home sales, durable goods and new home sales. The major FX moves will again take direction from the equity market, with key earnings reports due out from IBM, Bank of New York, Coca-Cola, Yahoo, Apple, Microsoft and PepsiCo.
Euro Tumbles to One-Month Low

The euro slumped to its lowest level since March 17th against the dollar beneath the 1.29-level to 1.2890. With the ECB still seemingly split as to whether further monetary stimulus is warranted given the current economic outlook of the Eurozone, traders continue to punish the euro. Economic reports in the coming session will see Germany’s April ZEW sentiment survey, due out at 5:00 AM. Consensus estimates call for the current conditions component to deteriorate to -90.0 from -89.4. Meanwhile, the April economic sentiment is seen improving to 1.5 from -3.5 a month earlier.

EURUSD will encounter support at 1.29-figure, followed by 1.2870 and 1.2840. Subsequent floors are eyed at 1.28, backed by 1.2760 and 1.2720. On the upside, gains will target interim resistance at 1.2930, followed by 1.2970 and 1.30. Additional resistance will emerge at 1.3035, backed by 1.3065 and 1.31.


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Australian, N.Z. Dollars Near 3-Week Lows on U.S. Bank Concerns

By Patricia Lui and Garfield Reynolds

April 21 (Bloomberg) -- The Australian dollar traded near its lowest in almost three weeks and New Zealand’s was close to the weakest in a month as concern U.S. banking losses will deepen damped investors’ appetite for risk.

The currencies fell yesterday by the most in more than two months as Bank of America Corp. tumbled after increasing future loan loss provisions 57 percent to $13.4 billion. Australian policy makers cut borrowing costs two weeks ago because rising unemployment increased the likelihood inflation will slow, according to minutes of their April 7 meeting, released in Sydney today.

“The big concern is that the market got overly complacent on risk in recent weeks and we are now moving into a period where we are questioning this,” said Robert Rennie, chief currency strategist at Westpac Banking Corp. in Sydney. “The recent weeks are about as good as it gets between risk appetite and economic data sentiment.”

Australia’s dollar traded at 69.94 U.S. cents as of 11:44 a.m. in Sydney, from 69.66 cents yesterday in New York, when it touched the lowest since April 1. It was at 68.60 yen from 68.20 yen. New Zealand’s currency bought 55.22 U.S. cents from 55.25 cents yesterday, when it reached as low as 54.88 cents, the weakest since March 19. It bought 54.18 yen from 54.06 yen.

U.S. stocks tumbled yesterday after six straight weeks of gains as concern grew that credit losses are worsening while lower commodity prices dragged down energy and material prices, key exports of Australia and New Zealand.

U.S. Banks

Bank of America, the lender that lost three-quarters of its market value in the past year, plunged 24 percent as rising charge-offs for uncollectible loans overshadowed better-than- estimated earnings. Citigroup Inc. dropped 19 percent after Goldman Sachs Group Inc. said the bank’s credit losses are growing at a “rapid rate.” U.S. Steel Corp. and Exxon Mobil Corp. declined as oil and industrial metal prices decreased.

“A bit of reality seems to have sunk in overnight, following Bank of America’s earnings results,” wrote analysts led by Cameron Bagrie, chief economist at ANZ National Bank Ltd. in Wellington. “With investors rushing for the exit doors from risky assets, the U.S. dollar and the yen rose strongly.”

The Australian dollar will remain weak in coming sessions and investors should take the opportunity to “sell into strength” if the currency rebounds to 70.20 U.S. cents to 70.50 U.S. cents, Westpac’s Rennie said.

Growth Slowing

Australia’s economic growth is “slowing dramatically,” Treasurer Wayne Swan said in an interview on Australian Broadcasting Corp. radio today. “It’s inevitable there will be a period of negative growth. It’s also important that we underline the strengths in the Australian economy.”

“The effect of recent international and domestic information had been that the near-term outlook for demand and output in Australia was now weaker than expected,” Reserve Bank policy makers said, according to minutes of their April 7 meeting.

Prime Minister Kevin Rudd said yesterday for the first time that a recession in Australia is inevitable amid a slump in global growth that is eroding demand for natural resources from the world’s biggest shipper of coal and iron ore. Central bank Governor Glenn Stevens and his board cut the benchmark rate by a quarter-point to a 49-year low of 3 percent this month, the sixth reduction since September.

To contact the reporter on this story: Patricia Lui in Singapore at plui4@bloomberg.netGarfield Reynolds in Sydney at greynolds1@bloomberg.net

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Emerging Market Government Credit ‘Markedly’ Worse, S&P Says

By Kim Kyoungwha

April 21 (Bloomberg) -- Emerging-market governments’ credit quality “markedly” deteriorated in the past six months and policy responses will be key to avoid ratings downgrades, Standard & Poor’s Ratings Services said.

The agency lowered 10 of 43 sovereign ratings among such debt issuers, including one default, and another 10 had their outlooks cut to negative in the six months ended March 31, S&P said in a report yesterday in New York. Eighteen emerging markets are on negative outlook and none have positive outlooks, according to the statement.

“That said, we think that the credit fundamentals of this asset class remain broadly intact,” said John B. Chambers, chairman of the Sovereign Ratings Committee. “For those sovereigns with negative outlooks, policy responses will be key, with any lowering of ratings likely to be modest in scope, as has been the case historically.”

Emerging-market currencies including South Korea’s won, the Russian ruble and Brazil’s real weakened in the past year, increasing the cost of servicing overseas debt, as fallout from the global credit crunch rippled through their export-dependent economies. Governments worldwide lowered borrowing costs at an unprecedented pace, increased public spending and reduced taxes to shore up growth in their economies.

China, Brazil, Chile, Czech Republic, Peru, Poland, Slovak Republic, and Tunisia -- which are investment-grade sovereigns with a stable outlook -- should weather the current global recession, the ratings agency said.

Those ratings are backed by policy makers’ efforts in building up international reserves, reducing government debt burdens, improving economic competitiveness, keeping inflation low and bolstering the solvency of financial systems, S&P said.

The extra yield investors demand to own developing-nation debt instead of U.S. Treasuries was 5.69 percentage points yesterday, according to JPMorgan Chase & Co.’s EMBI+ Index. The spread averaged 6.70 points in the past six months and peaked in 2008 at 8.65 points on Oct. 24.

To contact the reporters on this story: Kim Kyoungwha in Beijing at kkim19@bloomberg.net.

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Yen Declines on Speculation This Week’s Gains Were Excessive

By Ron Harui

April 21 (Bloomberg) -- The yen weakened against the euro and fell against the dollar as technical indicators showed the Japanese currency’s recent gains were excessive.

The yen pared the past week’s advance versus the 16-nation euro to 3.2 percent as the European currency’s 14-day stochastic oscillator against Japan’s dropped to 8 today, below the 20 level that signals the euro may have fallen too quickly and is poised to strengthen.

“There’s a sense the yen has been overbought,” said Toshihiko Sakai, head of trading for foreign exchange and financial products in Tokyo at Mitsubishi UFJ Trust & Banking Corp., a unit of Japan’s largest bank. “Market participants are probably unwinding long yen positions.” A long position is a bet an asset will gain.

The yen dropped to 126.94 per euro as of 10:25 a.m. in Tokyo from 126.48 in New York yesterday. It earlier reached 126.09, the strongest level since March 16. Japan’s currency declined to 98.18 per dollar from 97.89.

The dollar traded at $1.2929 per euro from $1.2921 yesterday, when it reached $1.2889, the highest level since March 16. The U.S. currency was at $1.4532 versus the British pound from $1.4539.

To contact the reporter on this story: Ron Harui in Singapore at rharui@bloomberg.net.

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Japan Yen, Indian Rupee, Thailand Baht: Asian Currency Preview

By Bob Chen

April 21 (Bloomberg) -- The following events and economic reports may influence trading in Asian currencies today. Exchange rates are from the previous session.

Japanese yen: Chief Cabinet Secretary Takeo Kawamura and Finance, Economic and Fiscal Policy Minister Kaoru Yosano will hold media briefings after a cabinet meeting in the morning. Kawamura will address reporters again at 4 p.m. in Tokyo.

The yen was at 97.99 against the dollar at 7 a.m. in Tokyo.

Indian rupee: The central bank may refrain today from reducing its benchmark interest rate from a record low of 3.5 percent, according to nine of 15 economists in a Bloomberg News survey. It will reduce the repurchase rate, its overnight lending rate, by half a percentage point to 4.5 percent, nine of 16 economists said in a separate survey. The decisions are due at noon in Mumbai.

The rupee was at 50.325.

Thai baht: The Ministry of Commerce will report March exports, imports and trade balance at 2 p.m. local time. Exports fell 11 percent in February, while imports plunged 40 percent.

The baht was at 35.60.

To contact the reporters on this story: Bob Chen in Hong Kong at bchen45@bloomberg.net

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South Korean Won Drops by Most in Two Weeks on Credit Loss Woes

By Kim Kyoungwha

April 21 (Bloomberg) -- South Korea’s won dropped the most in almost two weeks as widening credit losses in the U.S. damped risk appetite, curbing demand for emerging-market assets.

The currency weakened for a second day, following a run of six straight weekly gains, after Bank of America Corp. set aside more money for bad loans and Goldman Sachs Group Inc. said Citigroup Inc.’s credit losses are growing at a “rapid rate.” Korean shares retreated after a 4.3 percent plunge in the Standard & Poor’s 500 Index, the steepest slide in seven weeks.

“A drop in U.S. stocks is buoying the flight-to-quality sentiment again,” said James Lee, an economist with JPMorgan Chase & Co. in Seoul. “And a consolidation in the won after a recent rally was overdue as people turned a bit cautious about chasing the currency further.”

The won fell 1.3 percent to 1,352.13 per dollar as of 9:52 a.m. in Seoul, according to data compiled by Bloomberg. The currency has lost 6.9 percent this year, the biggest drop among Asia’s 10 most-traded currencies outside of Japan. The Kospi index of local equities slid 1.5 percent today.

Emerging-market governments’ credit quality “markedly” deteriorated in the past six months and policy responses will be key to avoid ratings downgrades, Standard & Poor’s Ratings Services said yesterday in New York.

The International Monetary Fund will cut its forecast for Korea’s economic growth next year to about 1.5 percent, the Chosun Ilbo newspaper reported. The estimate, which will be announced in the IMF’s World Economic Outlook report tomorrow, is lower than the fund’s previous projection of 4.2 percent growth, the newspaper reported, without saying where it obtained the information.

The Bank of Korea this month forecast the economy will expand 3.5 percent in 2010, after shrinking 2.4 percent in 2009.

To contact the reporters on this story: Kim Kyoungwha in Beijing at kkim19@bloomberg.net;

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Copper Futures in Shanghai Slump 5% Limit to 37,370 Yuan a Ton

By Glenys Sim

April 21 (Bloomberg) -- Copper futures slumped by the exchange-imposed 5 percent daily limit in Shanghai, tracking an overnight decline in London, as the economic outlook in the U.S., the world’s second-largest consumer of the metal, dimmed.

Copper for July delivery on the Shanghai Futures Exchange tumbled 1,970 yuan from the previous settlement price to 37,370 yuan ($5,469) a metric ton.

To contact the reporter on this story: Glenys Sim in Singapore at Gsim4@bloomberg.net

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Want Want China Prices Taiwan Stock at Top of Range

By Weiyi Lim

April 21 (Bloomberg) -- Want Want China Holdings Ltd., the country’s largest maker of rice cakes, raised NT$3.26 billion ($96.43 million) after selling depositary receipts in Taiwan at the top of the price range.

The company, controlled by Taiwanese billionaire Tsai Eng- meng, sold 210 million Taiwan Depositary Receipts at NT$15.50 each, the company said in a filing to Hong Kong’s stock exchange today. They had been offered at between NT$12.50 and NT$15.50 each, underwriter Grand Cathay Securities Corp. said in a statement April 13. The shares will start trading on April 28.

The Shanghai-based company is the first from the mainland to sell shares on the island’s exchange after Taiwan eased restrictions to boost the capital markets. Taiwan’s regulator in July said it will scrap the rule barring share sales by companies with major stakeholders from China.

Want Want withdrew from its Singapore listing in September 2007 and raised HK$8.15 billion ($1.1 billion) on the Hong Kong exchange in March 2008.

To contact the reporter on this story: Weiyi Lim in Taipei at wlim26@bloomberg.net

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Japanese Stocks Slump on Bank Loss Concern, Oil; Sony Declines

By Masaki Kondo

April 21 (Bloomberg) -- Japanese stocks slumped the most this month after an increase in reserves at Bank of America Corp. renewed concern credit losses will swell at lenders.

Sumitomo Mitsui Financial Group Inc., Japan’s No. 3 listed bank, fell 2.8 percent after Bank of America’s results sparked the biggest drop in U.S. stocks in seven weeks. Sony Corp., which gets a quarter of its sales from the U.S., retreated 5.8 percent as Nikko Citigroup Ltd. cut its rating on the company to “hold,” and after the yen strengthened. Mitsui & Co., a trading house that gets more than half its profit from commodities, lost 5.7 percent after oil and metals prices fell.

The Nikkei 225 Stock Average declined 263.93, or 3 percent, to 8,660.82 as of 9:39 a.m. in Tokyo, set for the sharpest drop since March 30. The broader Topix index fell 22.41, or 2.6 percent, to 825.89.

“People have focused too much on the bright side of news coming out, and it’s high time to correct this excess optimism,” Yoshinori Nagano, a senior strategist at Daiwa Asset Management Co., which oversees about $96 billion, said in an interview with Bloomberg Television.

In New York, the Standard & Poor’s 500 Index slid 4.3 percent, the most since March 2, led by financial companies, after Bank of America said it increased reserves for future loan losses by 57 percent since the end of December.

Sumitomo Mitsui dived 2.8 percent to 2,945 yen, and market leader Mitsubishi UFJ Financial Group Inc. lost 2.6 percent to 483 yen. Orix Corp., the nation’s largest non-bank financial company, slid 5.7 percent to 4,480 yen after Nomura Holdings Inc. lowered its rating on the stock to “neutral” from “buy.”

‘Ambiguous Hope’

The Nikkei has risen by more than a quarter from a 26-year low on March 10 amid speculation the worst of the global recession has passed. The gauge’s members yesterday traded at 220 times their estimated net income for this fiscal year, according to index compiler Nikkei Inc., the highest level since January 2002.

“There is little chance to win if investors bet on ambiguous hope the economy will recover,” Norihiro Fujito, senior investment strategist at Tokyo-based Mitsubishi UFJ Securities Co., wrote in a Japanese-language report yesterday. “It’s hard to ignore that shares have become more expensive from a valuation standpoint.”

Prospects for more bank losses spurred demand for the yen as an investment haven. The Japanese currency touched 97.66, a level not seen since March 31, compared with 98.89 at the close of stock trading in Tokyo yesterday. A stronger local currency diminishes the value of overseas sales for Japanese companies.

Sony, Nissan

Sony, the world’s second-biggest maker of consumer electronics, declined 5.8 percent to 2,500 yen as Nikko Citigroup reduced Sony from “buy,” saying an earnings recovery will take time. Canon Inc., which gets a third of its sales from the Americas, slid 5.2 percent to 2,930 yen. Nissan Motor Co., Japan’s No. 3 automaker, dropped 4.2 percent to 480 yen.

Mitsui, Japan’s second-biggest trading house by market value, dived 5.7 percent to 1,124 yen. Bigger competitor Mitsubishi Corp. slid 5.6 percent to 1,586 yen, while Itochu Corp. fell 5.2 percent to 549 yen.

Crude oil for May delivery dived 8.8 percent to $45.88 a barrel in New York yesterday, the lowest settlement since March 11. Copper futures for July delivery slid 4.2 percent, the sharpest plunge since Feb. 17. Oil and copper extended declines today.

Mitsubishi may have a 100 billion-yen ($1.02 billion) drop in net income for the year to March 2010 because of falling prices for coking coal, the Nikkei newspaper said today. Mitsui and Itochu may also see lower coal prices hurt their profits by 10 billion yen to 30 billion yen, Nikkei said.

Nikkei futures expiring in June retreated 3 percent to 8,660 in Osaka and slumped 3.1 percent to 8,660 in Singapore.

To contact the reporter for this story: Masaki Kondo in Tokyo at mkondo3@bloomberg.net.

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Asian Stocks Slump on Growth Concerns; Orix, BHP Billiton Fall

By Patrick Rial and Shani Raja

April 21 (Bloomberg) -- Asian stocks slumped, led by financial and mining companies, as higher loan-loss reserves at Bank of America Corp. and a drop in commodity prices derailed optimism the global economy is recovering.

Orix Corp., Japan’s largest non-bank financial company, slid 6.1 percent after Nomura Holdings Inc. downgraded the shares. BHP Billiton Ltd., the world’s largest mining company, lost 3.6 percent after oil and metals prices sank. Mitsubishi Corp., Japan’s No. 1 trading company, dropped 5.2 percent after the Nikkei newspaper said falling coal prices will erode profits.

“You’re seeing cold water being poured on the theme of a sharp rebound in growth,” said Tim Schroeders, who helps manage about $1 billion at Pengana Capital Ltd. in Melbourne. “Last night’s data, along with indications that the rapid run we’ve experienced in the last six weeks may be coming to an end, has fed on itself.”

The MSCI Asia Pacific Index lost 1.9 percent to 88.34 as of 9:52 a.m. in Tokyo, retreating from a more than three-month high. A 27 percent rally through yesterday from a five-year low reached on March 9 had lifted the valuation of companies on the gauge to the highest since November 2007.

Japan’s Nikkei 225 Stock Average tumbled 2.5 percent to 8,701.29, while Australia’s S&P/ASX 200 Index slumped 2.7 percent. All markets open for trading declined.

Futures on the Standard & Poor’s 500 Index lost 0.2 percent. The gauge slid 4.3 percent yesterday, the most since March 2, led by financial companies, after Bank of America said it increased reserves for future loan losses by 57 percent since the end of December.

Yen, Commodities

Prospects for more bank losses spurred demand for the yen as an investment haven. The Japanese currency touched 97.66, a level not seen since March 31, compared with 98.89 at the 3 p.m. close of stock trading in Tokyo yesterday.

Speculation the worst of the global recession has passed drove valuations on the MSCI Asia Pacific Index to 19 times reported profit yesterday, the highest since Nov. 2, 2007. The 14-day relative strength index for the gauge rose to 67.7 yesterday, nearing the 70 threshold that some traders see as a sign to sell.

Financial companies accounted for 26 percent of the MSCI Asia Pacific Index’s decline today. Orix, whose shares have more than doubled in the past month, retreated 6.1 percent to 4,460 yen. Westpac Banking Corp., Australia’s third-largest bank, dropped 3.2 percent to A$19.61.

BHP sank 3.6 percent to A$31.71. Crude oil for May delivery dived 8.8 percent to $45.88 a barrel in New York yesterday, the lowest settlement since March 11. Copper futures for July delivery slid 4.2 percent, the sharpest plunge since Feb. 17.

Mitsubishi Corp., which owns a coal-mining venture with BHP, slumped 5.2 percent to 1,592 yen. Mitsubishi may have a 100 billion yen ($1.02 billion) drop in net income for the year to March 2010 because of falling prices for coking coal, the Nikkei newspaper reported today.

Rivals Mitsui & Co. and Itochu Corp. may also see lower coal prices hurt their profits by 10 billion yen to 30 billion yen, Nikkei said.

To contact the reporters for this story: Patrick Rial in Tokyo at prial@bloomberg.net; Shani Raja in Sydney at sraja4@bloomberg.net.

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