Asia dips on credit woes

GLOBAL MARKETS

Asian stocks fell the most in a week, led by Mitsubishi UFJ Financial Group Inc, after Bank of America Corp said fallout from the US subprime-mortgage losses will hurt earnings.

Mitsubishi UFJ posted its biggest drop in a month and National Australia Bank slid to a seven-week low on concern about contagion in credit markets, which yesterday compelled the UK government to guarantee it would back deposits held by Northern Rock Plc. Toyota Motor Corp led exporters lower on speculation the US economy will slow and Korean Air Lines Co declined after the cost of crude oil exceeded $81 a barrel.

"The flow-over to the UK has provided a reminder that the credit crunch remains in place," said Shane Oliver, who helps manage about $83 billion at AMP Capital Investors in Sydney. "Risks are still fairly high when it comes to financials."

The Morgan Stanley Capital International Asia-Pacific Index slid 1.5 per cent to 149.41 as of 6:18 p.m. in Tokyo, set for its biggest drop since September 10. Financial shares were the biggest drags among the measure's 10 industry groups, accounting for almost half the benchmark's retreat.

EUROPE

European stocks rose, led by banks after the UK government said it will guarantee all customer deposits at Northern Rock Plc and the Bank of England made emergency loans to lenders to boost confidence.

Northern Rock, the mortgage lender bailed out by the BOE last week, jumped 6.8 per cent. Alliance & Leicester Plc, whose shares tumbled 31 per cent yesterday, and Bradford & Bingley Plc, which makes one in five loans to the UK landlords, also rallied.

The Dow Jones Stoxx 600 Index added 0.2 per cent to 363.02 as of 11:09 a.m. in London, with banks accounting for the biggest gains.

The Stoxx 50 climbed 0.1 per cent, as did the Euro Stoxx 50, a measure for the euro region.

US

US stock-index futures increased as investors speculated the Federal Reserve will lower interest rates at today's meeting and signal it's ready to take measures easing the economic effects of subprime-mortgage losses.

Standard & Poor's 500 Index futures expiring in December added 1.7 to 1,491.5 as of 11:51 a.m. in London. Dow Jones Industrial Average futures increased 29 to 13,532 and Nasdaq 100 Index futures advanced 3.5 to 2,009.5.