Asian stocks fall on lower oil, metals prices

Asian stocks fell for a second week, led by BHP Billiton, the world's largest mining company, and Woodside Petroleum, after metals prices declined and crude oil retreated below $94 a barrel.

"We have exited from commodity-related investments," said Leslie Phang, who helps manage $1 billion at Commonwealth Private Bank in Singapore. "While oil prices will eventually trend higher in the longer term, current price levels are not sustainable."

National Australia Bank and HSBC Holdings Plc led financial companies lower on concern they may report widening losses linked to the US home loans to borrowers with poor credit, after Wells Fargo & Co said its fourth-quarter home-equity losses are likely to increase.

The Morgan Stanley Capital International Asia Pacific Index fell 2.8 per cent this week, its second-straight weekly decline. Energy stocks had the biggest percentage decline among the 10 industry groups on the gauge, sliding 6.2 per cent.

Japan's Nikkei 225 Stock Average fell 2.8 per cent, while the broader Topix index slid 1.5 per cent. Toyota Motor Corp and Canon Inc paced declines by Japanese exporters after the yen gained for a second week against the US dollar, reducing the value of dollar-denominated receipts in local currency terms.

Regional indexes
Benchmarks elsewhere in the region declined, except in India and Sri Lanka. Hong Kong's Hang Seng Index fell 4.1 per cent on speculation China's central bank will raise interest rates and after a plan to allow Chinese citizens to invest directly in the city's stock market was delayed. Industrial & Commercial Bank of China fell 5 per cent to HK$6.07 in Hong Kong and 1.3 per cent in Shanghai. BHP Billiton lost 3.1 per cent to A$41.15 in Sydney. A magnitude-7.7 earthquake struck Chile on November 14 and stopped production at its mines, including Escondida, the world's largest copper source. Production resumed the day after.

Sumitomo Metal Mining Co, Japan's biggest gold and nickel producer, dropped 6.2 per cent to 2,255 yen. Jiangxi Copper Co, China's second-biggest producer of the metal, declined 8 per cent to HK$19.46. Its Shanghai-traded shares fell 5 per cent.

A measure of six metals traded on the London Metal Exchange slid 2 per cent this week, its fifth consecutive weekly decline.

Mitsui, PetroChina
"The resources are down on metals prices, which are off on concerns about economic growth in the US,'' said Atul Lele, who helps manage the equivalent of $500 million at White Funds Management in Sydney. Crude oil futures retreated below $94 a barrel in New York this week, after closing at a high of $96.70 on November 6. Perth, Australia-based Woodside Petroleum, which is part- owned by Royal Dutch Shell Plc, fell 15 per cent to A$46.87, after the company cut its output forecast for 2008 by as much as 20 per cent. That was the biggest weekly drop since October 1987.

Mitsui & Co, whose profits are the most sensitive among Japan's trading houses to changes in the price of oil, dropped 10 per cent to 2,465 yen. PetroChina Co, the world's largest company by market value, fell 9.5 per cent to HK$14.60.

National Australia, the country's largest lender, declined 2.9 per cent to A$42.16. Westpac Banking, Australia's fourth- biggest, slid 2.2 per cent to A$27.99. HSBC, which generated 31 per cent of its revenue last year from North America, dropped 3.4 per cent to HK$136.20. Europe's biggest bank set aside $3.4 billion in the third-quarter to cover US defaults, $1.4 billion more than it forecast in July, the bank said November 14.

No end in sight?
Wells Fargo, the second-biggest US mortgage lender, this week described the US housing recession as the worst since the Great Depression.

"You just don't see an end to the sub-prime housing-loan problem," said Soichiro Monji, who helps oversee $47 billion at Daiwa SB Investments in Tokyo. "Unless we see some light at the end of the tunnel, we can't expect the market to rise."

The dollar fell for a second week against the Japanese yen, as companies reported more losses linked to the US mortgage defaults, prompting investors to cut holdings of higher-yielding assets funded with loans in Japan. A stronger Japanese currency decreases the value of companies' overseas earnings when converted into yen.

Toyota, which gets 70 per cent of its profit from operations in North America, fell 0.7 per cent to 6,110 yen. Canon, the world's biggest seller of digital cameras, fell 1.4 per cent to 5,500 yen.

Meanwhile, Fortescue Metals Group surged 16 per cent to A$58.50, after the Perth-based company discovered an iron ore deposit near its Western Australian mine.