Asia down on sub-prime woes

GLOBAL MARKETS/ STOCK REPORT

Asian stocks fell, led by Australian banks and Japanese insurers, on concerns that mounting losses tied to US subprime mortgages will erode profit.

Australia & New Zealand Banking Group dropped to its lowest since September 2005 after its chief executive said a ``bloodbath'' in debt markets will wipe out earnings growth.

Japan's Aioi Insurance Co sank after a newspaper said it will have $740 million of subprime-related losses. Nippon Steel climbed after Japanese steelmakers agreed to pay less than analysts had estimated for iron ore.

"The subprime problem, in a broad sense, is still lingering over the market,'' said Yoshinori Nagano, who helps oversee about $70 billion at Daiwa Asset Management Co in Tokyo. "The fact that we don't hear about real solutions to the credit crunch tells you that this is no easy problem to solve.''

The MSCI Asia Pacific Index lost 0.6 per cent to 143.86 at 7:27 pm in Tokyo, reversing an earlier gain of 0.8 per cent. A measure of banks and insurers contributed the most to the drop.

Japan's Nikkei 225 Stock Average gained 0.1 per cent to 13,635.40.

Most benchmarks in Asia fell, with Hong Kong's Hang Seng Index slumping 1.6 per cent. Shanghai Pudong Development Bank led gains in China after a unit was allowed to market a new fund.

MSCI's Asian benchmark is down 8.8 per cent this year on concern global economic growth is slowing amid losses tied to US sub-prime, or higher risk, mortgages.

EUROPE
European stocks advanced, led by banks, after Qatar said it's accumulating shares in Credit Suisse Group and investors speculated Barclays and Lloyds TSB Group of the UK would boost their dividends.

Credit Suisse, Switzerland's second-biggest bank, rallied in Zurich. Barclays and Lloyds TSB climbed more than 4 per cent in London after the Sunday Times said they will increase their dividends. Daimler AG rose to a four-week high as Goldman Sachs raised its estimate for the carmaker's share price.

The Dow Jones Stoxx 600 Index added 1.7 per cent to 322.76 as of 10:13 am in London. Asian stocks earlier declined on speculation losses tied to US sub-prime mortgages will curb profits at Australian banks and Japanese insurers.

The US market is closed on Monday for the Presidents' Day holiday. Concern the sub-prime mortgage slump will lead to more losses sent Europe's Stoxx Banks Index down 17 per cent this year.

The gauge was valued at 7.5 times profit in the week ended February 8, the lowest since at least 1998, data compiled by Bloomberg show.

National benchmarks advanced in all 18 western European markets. France's CAC 40 rose 1.9 per cent, while the U.K.'s FTSE 100 climbed 2.1 per cent. Germany's DAX increased 1.8 per cent.

The Stoxx 50 increased 1.5 per cent, and the Euro Stoxx 50, a measure for the euro region, rallied 1.7 per cent.