Asia feels credit chill

GLOBAL MARKETS/ STOCK REPORT

Asian stocks fell for the first time in three days, led by developers, on concerns that US credit-market losses will spread and damp demand for real estate.

Mitsubishi Estate dropped to a 17-month low after Credit Suisse Group said US mortgage defaults may prompt overseas investors to sell property holdings in Japan.

"Global investors are reducing their real estate investments across the board," said Hitoshi Yamamoto, chief executive officer of Fortis Asset Management in Tokyo.

The MSCI Asia Pacific Index lost 1.3 per cent to 153 as of 6:54 pm in Tokyo, snapping a two-day, 1.3 per cent advance. All 10 industry groups on the benchmark dropped, with a measure of financial stocks the biggest drag on the regional index.

All Asian benchmarks fell, apart from the Philippines and China. Malaysia and Indonesia were shut for holidays. Japan's Nikkei 225 Stock Average retreated 1.5 per cent to 14,388, the lowest close since June 2006, after Goldman Sachs Group cut its economic growth estimate for the country and said there's a 50 per cent chance of a recession in the world's second-largest economy.

EUROPE
European stocks were little changed before interest-rate decisions by central banks in the region. Gains by retailers offset a retreat in oil companies after sales results from J Sainsbury and Metro AG beat analysts' estimates.

Sainsbury and Metro led a rebound in retail shares, which yesterday tumbled the most since September 2001. Declines by BP and Total sent the Dow Jones Europe Stoxx Oil & Gas Index to a three-week low. The Bank of England and the European Central Bank will probably keep rates on hold on Thursday.

The BOE will announce its decision at noon in London, followed by the ECB 45 minutes later. European government bonds fell on expectations policy makers will keep the region's borrowing costs at the highest in more than six years. The euro climbed against the yen. US
US stock-index futures retreated after Capital One Financial Corp reduced its profit forecast, fueling speculation credit-market turmoil and slowing economic growth may hurt earnings more than analysts estimated.

Freddie Mac shares dropped in Europe after Moody's Investors Service said it may downgrade the second-largest provider of money for US home loans. Standard and Poor's 500 Index futures expiring in March lost 3.1 points to 1,408.50 as of 10:20 am in London.

Dow Jones Industrial Average futures decreased 24 points to 12,721.

Nasdaq-100 Index futures fell 7.25 points to 1,949.25.

US stocks gained the most in two weeks yesterday after Warren Buffett's Berkshire Hathaway said it may invest in municipal bond insurers and Hewlett-Packard predicted earnings will withstand an economic slowdown.