Asian markets tumble

GLOBAL MARKETS/ STOCK REPORT

Asian stocks fell on speculation a US housing slump will hamper regional earnings growth. The yen rose to the highest in two weeks against the dollar. Japanese 10-year bonds advanced.

Asian stocks declined after UBS AG cut its share-price estimates on Japanese banks and Wells Fargo & Co reported a loss from home loans, fueling concern a US housing downturn may hamper earnings growth at financial companies.

Mitsubishi UFJ Financial Group Inc, Japan's biggest publicly traded bank, dropped to a three-week low. Reliance Industries led a slump in India after the securities regulator proposed investment controls targeting global funds.

"We've entered a period of more cautious investing,'' said Naoki Fujiwara, who helps oversee $3.2 billion at Shinkin Asset Management Co in Tokyo. "We are seeing a lot more impact on bank profits from the US housing market."

The Morgan Stanley Capital International Asia-Pacific Index lost 1 per cent to 164.93 at 4:25 pm in Tokyo. Japan's Nikkei 225 Stock Average fell 1.1 per cent and the Sensex tumbled as much as 9.2 per cent. PetroChina Co gained after crude oil prices topped $88 a barrel for the first time.

Europe
European stocks rose, led by technology and retail companies, after Intel Corp of the US forecast sales that topped analysts' estimates and France's Groupe Danone SA and Carrefour SA said revenue advanced.

Infineon Technologies AG and STMicroelectronics NV, Europe's biggest chipmakers, gained. ASML Holding NV, the region's largest maker of semiconductor equipment, jumped the most since 2003 after saying orders increased for the first time in four quarters. Danone climbed the most in two months, while Carrefour had its biggest rally since February.

The Dow Jones Stoxx 600 Index added 0.1 per cent to 384.45 as of 10:52 am in London. The Stoxx 50 fell 0.1 per cent, while the Euro Stoxx 50, a measure for the euro region, rose 0.1 per cent.

US
US stock-index futures advanced after Intel Corp and Yahoo! Inc posted earnings that topped analysts' estimates.

"These results boosted sentiment for US stocks,'' said Juergen Lukasser, who helps manage $20 billion as head of equities at Constantia Privatbank AG in Vienna. Standard & Poor's 500 Index futures expiring in December climbed 7.5 per cent to 1,555.10 as of 10:32 am in London.

Dow Jones Industrial Average futures increased 57 to 14,029. Nasdaq-100 Index futures gained 16.25 to 2,192.5.

US stocks dropped yesterday after Wells Fargo & Co. and KeyCorp reported earnings that fell short of analysts' estimates and Federal Reserve Chairman Ben Bernanke said the housing slump may drag on through next year. Analysts project S&P 500 companies averaged a 0.6 percent loss for the third quarter.

Earnings growth of S&P 500 technology companies will accelerate to 22.9 percent in 2008 from 10.9 per cent anticipated for this year, according to analyst projections compiled by Bloomberg. The 2008 estimate is the largest projected gain among the S&P 500's 10 main industry groups.

The yen rose to the strongest in two weeks against the dollar and gained versus the euro as declines in global stocks prompted investors to sell higher-yielding currencies bought with loans in Japan.

The Japanese yen advanced versus all 16 of the most-active currencies as investors reduced so-called carry trades before the Group of Seven meeting on October 19, when officials are expected to discuss exchange rates. Indian shares plunged, triggering a trading halt, and the rupee fell the most in two months after regulators proposed controls targeting funds from overseas investors.

"The yen may extend gains,'' said Masanobu Ishikawa, general manager of foreign exchange at Tokyo Forex & Ueda Harlow Ltd. "Falling stocks are hurting appetite for carry trades and giving the yen a boost. Traders are reluctant to sell the yen before the G-7 meeting.''

Japanese 10-year bonds gained the most in five weeks after a slide in stocks boosted demand for the relative safety of government debt.

Benchmark yields fell to a two-week low after losses on home loans at Wells Fargo & Co and record low confidence among US home builders damped demand for Asian equities. Federal Reserve Chairman Ben S Bernanke on October 15 said the housing downturn would be a "significant drag'' on growth in the US, the world's largest economy and Japan's biggest export market.

"It's not only the equity market but all markets are moving to risk averse mode which is bond positive,'' said Naruki Nakamura, who helps manage the equivalent of $3.2 billion of bonds in Tokyo at Fischer Francis Trees & Watts.

The yield on the 1.7 per cent bond due September 2017 fell 4.5 basis points to 1.65 per cent as of 4:31 pm in Tokyo according to Japan Bond Trading Co, the nation's largest interdealer debt broker. A basis point is 0.01 percentage point.