Asian Stocks, Won Decline on Slower Growth

By Lynn Thomasson and Norie Kuboyama - Dec 9, 2011 12:44 PM GMT+0700

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Dec. 9 (Bloomberg) -- Steve Brice, chief investment strategist at Standard Chartered Plc in Singapore, talks about the outlook for gold prices. Brice also discusses China's economy, stocks and investment strategy. He speaks with John Dawson on Bloomberg Television's "On the Move Asia." (Brice spoke before China announced its consumer price index data for November. Source: Bloomberg)

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Dec. 9 (Bloomberg) -- Kent Smetters, a professor at the University of Pennsylvania’s Wharton School and a former Treasury Department economic policy official, talks about Europe's sovereign debt crisis. He speaks with Susan Li on Bloomberg Television's "First Up." (Source: Bloomberg)

Asia stocks (MXAP) fell, sending the regional benchmark to the biggest drop in a month, while the South Korean won declined after cooling Chinese inflation signaled weaker economic growth. U.S. stock futures briefly rose after European Central Bank President Mario Draghi said leaders have laid out a new “fiscal compact” to fight the debt crisis.

The MSCI Asia Pacific Index dropped 2 percent as of 2:14 p.m. in Tokyo, poised for the biggest retreat since Nov. 10. The MSCI China Index (MXCN) sank 2.9 percent and the Nikkei 225 Stock Average retreated 1.5 percent. The won weakened against all 16 major counterparts. Oil fell for a third day to $98.08 a barrel. Futures on the Standard & Poor’s 500 Index rose 0.6 percent before trading little changed.

China’s inflation cooled to the slowest pace in 14 months in November, and industrial output climbed by the weakest amount in more than two years. Japan’s economy grew less than the government’s initial estimate last quarter and the Bank of Korea said the nation’s growth may slow next year. French President Nicolas Sarkozy said European Union leaders’ talks were “extremely difficult” and the U.K. made a treaty of all nations impossible.

“Investors remain concerned about how bad the economy will get next year and that’s what’s hindering buying now,” said Zhang Ling, general manager at Shanghai River Fund Management Co. in Shanghai. “Policies will gradually be loosened amid the backdrop of the economic slowdown.”

China Output

China’s industrial output rose 12.4 percent last month, the slowest pace since August 2009, according to data released today by the Beijing-based National Bureau of Statistics. Consumer prices increased 4.2 percent from a year earlier, the bureau said. That was lower than all estimates in a Bloomberg News survey of 35 economists that had a median forecast of 4.5 percent.

The euro pared a decline of 0.2 percent to trade little changed at $1.3335. European leaders stepped up the fight against the debt crisis, channeling as much as 200 billion euros to the International Monetary Fund and bowing to European Central Bank demands for a tightening of anti-deficit rules.

“It’s a very good outcome for euro-area members and it’s going to be the basis for a good fiscal compact and more disciplined economic policy in euro-area countries,” Draghi told reporters after 12 hours of overnight talks in Brussels.

The MSCI World Index lost 1.8 percent yesterday, the most since Nov. 23, after Draghi said he did not necessarily signal the central bank would increase government bond purchases when he spoke last week, adding that the program was not eternal or infinite.

Japan Slows

Sony Corp. (6758), Nomura Holdings Inc. and Fanuc Corp. (6954) slid more than 3 percent. Japan’s gross domestic product increased at an annualized 5.6 percent in the three months ended Sept. 30, the Cabinet Office said in Tokyo today, compared with a preliminary figure of 6 percent. The median forecast of 19 economists surveyed by Bloomberg News was for an increase of 5.2 percent.

The cost of insuring Japanese corporate bonds against non- payment increased, according to credit-default swap traders. The Markit iTraxx Japan index rose 7 basis points to 183, Deutsche Bank AG prices show. The index is on track for its biggest increase since Nov. 24, according to CMA.

S&P 500 futures increased to 1,234.3. U.S. 10-year yields rose two basis points to 1.99 percent after reaching the lowest level in a month yesterday. The Thomson Reuters/University of Michigan index of consumer sentiment probably rose to 65.8 in December from 64.1 in November, the highest level since June, according to a Bloomberg survey of economists before the data is released today.

Won Drops

South Korea’s won fell 1.3 percent to 1,146.25 per dollar. Growth is set to slow and inflation may ease next year, the Bank of Korea said a day after leaving borrowing costs unchanged on concern Europe’s debt crisis poses risks to Asia’s fourth- biggest economy.

Copper rose for the first time in four days, adding 0.2 percent to $7,722 a metric ton. Gold for immediate delivery was little changed at $1,709.80 an ounce after falling 1.9 percent yesterday, the most in two weeks.

Palladium for immediate delivery declined 1.3 percent to $664 an ounce. It has risen 3.2 percent this week, the best performer among metals tracked by Bloomberg, on speculation that rising car sales will boost demand for the metal used in pollution-control devices. U.S. sales of light vehicles in November expanded at the fastest pace in more than two years.

To contact the reporter on this story: Lynn Thomasson in Hong Kong at lthomasson@bloomberg.net; Norie Kuboyama in Tokyo at nkuboyama@bloomberg.net.

To contact the editor responsible for this story: Richard Dobson at rdobson4@bloomberg.net