Subprime woes hit scrips

GLOBAL MARKETS

Asian stocks fell, extending a rout that wiped $2.66 trillion from global equities, on concerns that losses in the US subprime mortgage market will slow economic growth and drive up financing costs.

Macquarie Bank and DBS Group Holdings led declines by brokerages and banks. Sony fell after the yen rose to a four-month high as investors pared bets on assets funded with the currency. Treasuries climbed as investors sought the safety of government bonds over equities and corporate debt.

'Market concern has spread to the broader US economy from the subprime issue and investors are re-evaluating their bullish view of exporter stocks,'' said Hiroshi Chano, who helps manage $7.3 billion at Yasuda Asset Management in Tokyo. 'Financial shares were also sold on speculation they will be affected.''

The Morgan Stanley Capital International Asia Pacific Index lost 1 per cent to 151.32 in Tokyo. The benchmark has dropped 6.2 per cent since closing at a record on July 24. The drop has wiped out more than the combined market value of South Korea and Australia since this year's peak on July 23.

Europe

European stocks fell, following declines in Asia and the US, on mounting concern that losses in the US mortgage market will erode economic growth and raise financing costs for companies. UBS and BNP Paribas led a drop by financial shares. Royal Philips Electronics and Lafarge decreased as the dollar traded near a record low against the euro. BHP Billiton and Rio Tinto Group slipped after copper fell in Shanghai.

'The subprime crisis and its implications for the rest of the economy are weighing on stocks,'' said Alexandre Iatrides, who helps manage about $5 billion in assets at Richelieu Finance in Paris. 'This is more than a market correction. You have to be really cautious.''

US

US stock-index futures climbed as investors speculated last week's losses may have been exaggerated. Ford Motor Company advanced in Europe after the London Times reported that Jacques Nasser, the company's former chief executive officer, may visit the Land Rover and Jaguar factories in the UK as part of an attempt to buy the brands. Merrill Lynch gained after UBS recommended buying shares of the third-largest US securities firm.

US stocks tumbled last week on evidence that losses in the mortgage market may slow the economy and reduce bank profits, sending the Standard & Poor's 500 Index to its worst three-week retreat since 2003.

S&P 500 futures expiring in September climbed 7 to 1,450 in London. Dow Jones Industrial Average futures rose 60 to 13,326. Nasdaq-100 Index futures added 7.75 to 1,947.25.