Asian stocks down

Global Markets - Stock Report

Asian stocks fell from a six-week high after the Federal Reserve said it may raise interest rates to curb inflation. Toyota Motor Corp and BHP Billiton led declines among companies that rely on US sales.

Andrew Wang, who manages $228 million at Prudential Securities Investment Trust in Taiwan said: "A delay in the rate cut in the US will hurt profit prospects of Asian exporters and a rate increase will be worse.''

Paladin Resources, an Australian uranium explorer, declined after raising its stock offer for Summit Resources by 20 per cent. Japanese steelmakers gained after Nippon Steel agreed to increase production at a venture in China.

The Morgan Stanley Capital International Asia-Pacific Index slipped 0.5 per cent to 147.23, halting a three-day, 1.1 per cent climb that lifted the measure to the highest since February 27. Japan's Nikkei 225 Stock Average and the broader Topix index declined 0.7 per cent. The Philippine Stock Exchange Index slid 2.2 per cent, Asia's biggest drop.

Benchmarks fell elsewhere except in South Korea and Australia, which closed at new highs. China rose to its ninth straight record. Indexes also gained in New Zealand, Malaysia and Pakistan. US shares fell yesterday for the first time this month, with the Standard & Poor's 500 Index losing 0.7 per cent after the Fed released minutes from a March 20-21 policy meeting.

"The combination of generally weaker-than-expected economic indicators and uncomfortably high readings on inflation suggested increased downside risks to economic growth and greater uncertainty that the expected gradual decline in core inflation would materialise,'' the minutes said.

Fed policymakers also removed a reference in their statement to tighter credit.

Toyota, Japan's largest automaker, dropped 1.3 per cent to 7,370 yen. The company generated more than a third of its fiscal 2006 revenue in North America. BHP, the world's largest mining company, slid 1.2 per cent to A$30.23. "The economic recovery might be slowing down,'' said Masaki Iso, who oversees about $7.3 billion as head of Japanese equities at Yasuda Asset Management in Tokyo.

Shares also fell after the International Monetary Fund said the US economy will expand at its slowest pace in five years. The IMF trimmed its forecast for US growth to 2.2 per cent from a September estimate of 2.9 per cent, citing the weakening housing market.

Hyundai Heavy Industries, the world's biggest shipbuilder, gained 3.7 per cent to 211,000 won. Daewoo Shipbuilding & Marine Engineering, the third largest, added 1.7 per cent to 35,250 won.