Asia snaps 5-day rally

GLOBAL MARKETS

Asian stocks fell for the first time in six days after a higher-than-forecast gain in US labour costs fuelled concern the Federal Reserve will follow Europe in raising interest rates to tame inflation.

The Morgan Stanley Capital International Asia-Pacific Index retreated from a record high, following declines in the US and Europe. Toyota Motor Corp, which made more than a third of its sales in North America last year, and Samsung Electronics Co, Asia's largest maker of chips and mobile phones, led declines.

The MSCI Asian index lost 0.5 percent to 152.38 as of 10:45 a.m. in Tokyo, snapping a five-day, 3.3 per cent rally. BHP Billiton led mining shares lower after metals prices fell. Japan's Nikkei 225 Stock Average dropped 0.8 per cent to 17,891.70. Benchmarks in other markets open for trading declined, except in China, where the CSI 300 Index advanced for a third day.

The US government's measure of labour costs rose 1.8 per cent last quarter, triple the rate initially estimated and higher than the 1.3 per cent expected by economists surveyed by Bloomberg News. Federal Reserve Bank of Cleveland President Sandra Pianalto yesterday joined Fed Chairman Ben S. Bernanke in warning that prices are rising too quickly.

Europe

European stocks headed for the longest losing streak in three months, paced by industrial companies after brokerages downgraded shares of Volvo AB and SKF AB. Indexes extended declines on reports North Korea test fired several short-range missiles into the Yellow Sea.

Europe's Dow Jones Stoxx 600 Index dropped for a fourth day, the longest rout since the first week of March. The measure dropped the most in two months yesterday on expectations the European Central Bank will keep raising borrowing costs. The Bank of England today left its benchmark interest rate unchanged after increasing it to the highest in six years last month.

US

US stock-index futures gained after Citigroup Inc said bond yields haven't risen enough to reduce the allure of stocks. Home Depot Inc, the largest US home improvement chain, and DuPont Co, the third-biggest chemical company in the country, led gains among shares that lost the most in the previous two days.

US indexes posted their steepest two-day losses since March yesterday following a government report that showed labour costs rose more than forecast, fuelling concern the Federal Reserve may increase interest rates. Bond yields climbed to a nine-month high this week.