US probe blues

GLOBAL MARKETS

Asian stocks dropped for the first time in five days after the US Justice Department began investigating makers of flash-memory chips and falling crude prices drove down oil producers.

Samsung Electronics Co, the world's biggest maker of NAND flash memory, fell to the lowest in more than three months. Taiwan Semiconductor Manufacturing Co slid after chip prices declined. BHP Billiton Ltd, the world's biggest mining company, retreated after oil dropped from a record.

"Investors hadn't been expecting a probe into NAND," said Lee Young Seog, who helps manage $750 million at Korea Investment Trust Management Co in Seoul. "Prices had been falling to begin with, so this extra news is souring sentiment on Samsung."

The Morgan Stanley Capital International Asia-Pacific excluding Japan Index slid 0.9 per cent to 485.48 as of 6:25 p.m. in Hong Kong, halting a four-day, 3.1 per cent rally. A measure of technology shares posted the biggest loss among 10 industry groups.

Europe

Stocks in Europe declined, led by banks, after customers lined up at Northern Rock Plc branches across the UK to withdraw their savings for a third day.

Northern Rock, the UK mortgage lender bailed out by the Bank of England last week, tumbled 32 per cent. Bradford & Bingley Plc and Alliance & Leicester Plc also dropped after Citigroup Inc downgraded the banks' shares. The Morgan Stanley Capital International World Index slipped 0.5 per cent to 1,558.87 as of 11:54 a.m. in London, with financial shares accounting for the biggest decline. Standard & Poor's 500 Index futures sank 0.6 per cent to 1,488.5.

US

US stock-index futures declined. Microsoft Corp dropped in Europe after the world's largest software maker lost its appeal of an antitrust ruling, forcing the company to pay a record fine.

American Express Co, the third-biggest credit card network, and Citigroup, the largest US bank, also fell. Bank and brokerage stocks have retreated this year on concern credit-market turmoil will hurt earnings. The Standard & Poors 500 Financials Index has lost 8.7 per cent since December, for the worst performance among 10 industry groups. "The problems within financials will continue," said Nick Skiming, a fund manager at Ashburton, which oversees $1.5 billion in Jersey, Channel Islands. "There will be more fallout for another couple of months."