Energy fuels Asia slides

GLOBAL MARKETS/ STOCK REPORT

Asian energy and mining stocks rose after a weaker dollar triggered a rally in commodity prices. Benchmarks fell in Japan and South Korea, which import almost all their fuel, after the price of crude climbed above $98 for the first time.

Cnooc, China's largest offshore oil explorer, rose for the first time in four days, while Tokyo Electric Power, Asia's largest electricity producer, and Korea Electric Power declined on concerns that higher fuel costs will erode profits. Nintendo led exporters lower on fears of a weaker dollar may decrease the value of overseas sales when converted into yen.

The Morgan Stanley Capital International Asia-Pacific Index, a dollar-denominated measure of 1,053 companies in the region, added 0.2 per cent to 166.84 as of 5:44 pm in Tokyo, with about three stocks falling for every two that rose. A group of energy shares had the biggest gain among the index's 10 industry groups.

Japan's Nikkei 225 Stock Average slid 0.9 per cent to 16,096.68, its fourth straight day of losses. Orix, Japan's largest non-bank financial company, plunged after it said first-half profit from operations fell 27 per cent.

EUROPE
European stocks extended declines, led by ING Groep NV, Axa SA and British Airways, as the dollar fell to a record low and oil prices surpassed $98 a barrel. The Dow Jones Stoxx 600 Index lost 0.7 per cent to 376.16 as of 9:52 am in London. The Stoxx 50 fell 0.6 per cent, as did the Euro Stoxx 50, an index for the euro region.

National benchmarks declined in 15 of the 17 western European markets that were open. The UK's FTSE 100 slid 0.5 per cent. France's CAC 40 sunk 0.1 per cent, and Germany's DAX decreased 0.4 per cent.

The dollar slid to an all-time against the euro after a Chinese government adviser said plans to diversify foreign exchange reserves will involve buying better-performing currencies.

US
US stock-index futures declined as crude oil prices rose to more than $98 a barrel and the dollar sank to a record low against the euro, spurring concern that higher costs and inflation will curb corporate profits.

"It's all part of the background that is emerging for being a bit cautious on the outlook for the markets," said Mike Lenhoff, who helps oversee about $36 billion as chief strategist at Brewin Dolphin Securities in London. "We could see a moderation in earnings growth."

General Motors, the world's largest automaker, dropped in Europe before reporting what probably will be its biggest-ever quarterly loss. Time Warner, the biggest media company, and American International Group, the No. 1 insurer, also retreated before releasing results. Boeing, the second largest commercial aircraft maker, sank as oil increased.

Standard & Poor's 500 Index futures expiring in December slipped 18 points to 1,507 as of 9:57 am in London. Dow Jones Industrial Average futures retreated 142 points to 13,535 and Nasdaq 100 Index futures decreased 21.25 points to 2,212.25.

"We don't know what will happen with US economic growth," said Nathalie Pelras, a fund manager at Richelieu Finance in Paris, which oversees $5 billion. "The dollar's decline reflects the lack of visibility, and the market doesn't like uncertainty."