Asian scrips end rally

GLOBAL MARKETS

Asian stocks snapped a week-long rally. Sony Corp and Honda Motor Co led Japanese exporters lower after the yen strengthened against the dollar, reducing the value of US sales.

The Morgan Stanley Capital International Asia-Pacific Index lost 0.4 per cent to 143.81 at 8:02 pm in Tokyo. It had gained 4.4 per cent in the past week. Japan's Nikkei 225 Stock Average dropped 0.7 per cent to 17,178.84. Markets also fell in Australia, South Korea, Singapore, Malaysia, Hong Kong, Pakistan and Sri Lanka.

Honda, Japan's third-biggest automaker by market value, lost 1.2 per cent to 4,260 yen. It made more than half of its sales in North America last year. Sony, the world's biggest maker of game consoles, dropped 2.1 per cent to 6,110 yen. Toyota Motor Corp, the world's No 2 automaker, fell 1.1 per cent to 7,790 yen.

The yen recently traded at 117.35 against the dollar, after falling to as low as 118.50 at 4:30 pm in Tokyo yesterday. A stronger Japanese currency means the nation's exporters get less for their dollar-denominated sales when converted to yen, while their products become less competitive.

Nikko Cordial, Japan's third-biggest brokerage, jumped 6.1 per cent to 1,490 yen, the biggest percentage gainer on the Morgan Stanley Capital International World Index. The company, which has admitted falsifying financial statements, will be allowed to keep its listing, the Tokyo Stock Exchange said yesterday after the market closed.

US

US stock and index futures fell after Texas Instruments gave a sales forecast that trailed analysts' estimates and concern mounted that bad home loans to the riskiest borrowers will reduce profit for lenders.

Standard & Poor's 500 Index futures expiring in June lost 6.2 to 1413 at 8:42 am in New York. Dow Jones Industrial Average futures sank 51 to 12,360 and Nasdaq-100 Index futures retreated 9.25 to 1769.

Europe

European stocks fell for a second day on speculation that rising loan defaults in the US will hurt earnings at the region's banks.

The Dow Jones Stoxx 600 Index dropped 0.5 per cent to 363.54 as of 12:39 pm in London. The Stoxx 50 and the Euro Stoxx 50, a measure for the 13 nations sharing the euro, lost 0.7 per cent.

Markets extended losses after a US government report showed retail sales rose less than forecast last month as an increase in gasoline prices limited spending on other goods.

National benchmarks dropped in all 18 western European markets today. France's CAC 40 sank 0.6 per cent, while Germany's DAX slid 0.8 per cent. The UK's FTSE 100 slipped 0.6 per cent.

"Investors are torn between greed and fear,'' said Boris Boehm, who helps oversee $7.2 billion at Nordinvest in Hamburg. "Volatility will remain high.''

Royal Bank of Scotland, the UK's No 2 bank by market value, declined 1.3 per cent to 2,064 pence. The US is the bank's second-largest market after Britain.

Commerzbank, Germany's second-largest bank by assets, dropped 2.1 per cent to 31.11 euros. Barclays, the UK's third-biggest bank, fell 1.9 per cent to 714 pence. The bank's second-biggest source of revenue is the US.