Asian Stocks Drop as China Interest Rate Concern Lingers; BHP, Rio Decline

Bloomberg Jan 21--Asian stocks fell, with the regional benchmark erasing its gains for the year, led by material producers, amid concern that China will take more steps to restrain its economy.

BHP Billiton Ltd., the world’s largest mining company, sank 1.9 percent and Rio Tinto Group, the third biggest, slipped 1.5 percent as commodity prices retreated. Japan Petroleum Exploration Co. slumped 3.3 percent in Tokyo, while Mitsubishi Corp., Japan’s largest commodities trader, lost 3.4 percent.

“With concerns about further monetary tightening in China, the decline in commodities can be seen clearly, so related shares may decline,” said Juichi Wako, a senior strategist at Tokyo-based Nomura Holdings Inc.

The MSCI Asia Pacific Index fell 0.8 percent to 136.79 as of 10:22 a.m. in Tokyo, with about four stocks declining for each that rose. China may raise interest rates early next month if the nation’s consumer price situation remains unfavorable in the first quarter, the China Securities Journal said in a front- page editorial today. There is room for an increase in the reserve requirement ratio for banks, according to the report.

Japan’s Nikkei 225 Stock Average dropped 0.8 percent and South Korea’s Kospi Index lost 1 percent, while Australia’s S&P/ASX 200 Index declined 0.7 percent. New Zealand’s NZX 50 Index climbed 0.1 percent after a report showed retail spending rose in November led by cars and fuel.

Futures on the Standard & Poor’s 500 Index slipped 0.2 percent today. The index slipped 0.1 percent yesterday in New York, paring earlier declines of as much as 0.8 percent, as Morgan Stanley led gains by financial companies, and homebuilders rallied, offsetting concern that China will raise interest rates and hamper global growth.

U.S. Data Improves

Purchases of existing houses in the U.S. jumped 12 percent in December to a 5.28 million annual rate, the National Association of Realtors said in Washington. Claims for unemployment benefits fell and the Conference Board’s gauge of the economic outlook for the next three to six months rose.

Oil for February delivery fell $2 to settle at $88.86 a barrel on the New York Mercantile Exchange, the biggest decline since Jan. 4. The London Metal Exchange Index of prices for six industrial metals including copper and aluminum lost 1.7 percent, its biggest decline since Nov. 16.

The MSCI Asia Pacific Index climbed 0.1 percent this year to yesterday, compared with gains of 1.8 percent by the S&P 500 and 1.3 percent by the Stoxx Europe 600 Index. Stocks in the Asian benchmark were valued at 14.1 times estimated earnings on average at the last close, compared with 13.4 times for the S&P 500 and 11.1 times for the Stoxx 600.