US housing slump woes

GLOBAL MARKETS

Asian stocks fell for the first time in three days as concern a US housing slump will slow growth led investors to seek the safety of government bonds.

Toyota Motor Corp, the world's largest automaker by market value, and Taiwan's Hon Hai Precision Industry Co, the biggest contract-electronics maker, paced declines. Standard & Poor's said mortgage defaults may grow while D R Horton Inc, the second-largest U.S. homebuilder, forecast it will post a third-quarter loss.

The Morgan Stanley Capital International Asia-Pacific Index slid 0.9 per cent to 157.21 at 7:15 p.m. in Tokyo, after a two-day, 1.5 per cent advance took it to a record yesterday. All 10 of its industry groups fell.

Japan's Nikkei 225 Stock Average dropped 1.1 per cent to 18,049.51, its biggest decline since June 27. The country's exporters were also dragged lower after the yen yesterday posted its second-biggest jump this year. Other benchmarks retreated, except in China and Sri Lanka.Bonds in Japan, Australia, South Korea and Hong Kong gained during stock-market trading as investors sold shares to buy into safer government securities. Japan's 10-year bonds rose the most since September.

EUROPE European stocks fell for a second day, led by banks and exporters, on concern mounting US mortgage losses will hamper the world's biggest economy and slow global expansion.

UBS AG, the world's largest money manager, and engineering company Siemens AG led declines. Royal Dutch Shell Plc retreated after Goldman, Sachs & Co recommended investors sell the oil producer's shares.

Europe's Dow Jones Stoxx 600 Index lost 0.4 per cent to 392.28 as of 11:07 a.m. in London, with 14 of 18 industry groups declining. Moody's Investors Service yesterday cut the credit ratings on $5.2 billion of bonds backed by subprime mortgages, while Standard & Poor's said it may downgrade $12 billion of securities.

US

US stock-index futures advanced as investors shrugged off concern about the housing market and bet that second-quarter earnings will beat analyst estimates.

Genentech Inc, the world's biggest maker of cancer medicines, and Yum! Brands Inc gained before reporting results. Exxon Mobil Corp, the world's biggest oil company, climbed in Europe after Bear, Stearns & Co raised its earnings estimates for the biggest oil companies.

Builders, banks and retailers dragged down the US stock market yesterday on increasing evidence the housing slump is depressing income. Analysts estimate Standard & Poor's 500 Index companies will post 4.8 per cent profit growth for the second quarter, according to data compiled by Bloomberg, up from 3.2 per cent three months ago.

S&P 500 futures expiring in September advanced 4.40 to 1524.40 as of 10:40 a.m. in London. Dow Jones Industrial Average futures added 30 to 13,615. Nasdaq-100 Index futures rose 2.50 to 1994.50.