Australia Stocks Fall on Commodities; Japanese Futures Advance

March 25 (Bloomberg) -- Australian stocks declined after commodity prices fell, while Japanese index futures advanced after the yen weakened to a two-month low against the dollar.

BHP Billiton Ltd., the world’s biggest mining company, sank 0.7 percent in Sydney. New York-traded securities of Honda Motor Co., which gets 44 percent of its sales in North America, climbed 1.2 percent from the Tokyo close, even after Portugal’s credit grade was cut by Fitch Ratings for the first time.

“As long as the yen remains weak, it will magnify the impact of strong overseas demand on corporate earnings,” said Mitsushige Akino, who oversees about $450 million at Ichiyoshi Investment Management Co. in Tokyo. “The problem of southern European nations is more like a chronic disease. It’s hurting the market little by little, but isn’t causing acute pain.”

Australia’s S&P/ASX 200 Index fell 0.2 percent to 4,882.30 as of 10 a.m. in Sydney. New Zealand’s NZX 50 Index was little changed in Wellington, where Statistics New Zealand reported the nation’s fourth-quarter gross domestic product expanded at the fastest pace in two years.

Yen-denominated futures on Japan’s Nikkei 225 Stock Average expiring in June closed at 10,795 in Chicago yesterday, 0.6 percent higher than 10,735 in Singapore. They were bid in the pre-market at 10,760 as of 8:05 a.m. in Osaka, Japan.

Crude oil for May delivery dropped 1.6 percent in New York yesterday, and gold futures for April delivery fell 1.4 percent. Copper futures for May delivery slid 1 percent.

Yen Weakens

The yen depreciated to 92.40 per dollar around 5:10 a.m. in Tokyo, the weakest level since Jan. 12, and weakened versus the euro to 123.02 from 121.56 at yesterday’s 3 p.m. close of stock trading. A weaker yen boosts the value of overseas income at Japanese companies when converted into their home currency.

The MSCI Asia Pacific Index has lost 1.1 percent this week, set for its first weekly slump in five, after an interest-rate increase by India’s central bank spurred concern governments and central banks globally will unwind stimulus measures that helped pull the world’s economy out of recession. Stocks in the gauge trade at 18.9 times estimated earnings, compared with 15.1 times for the MSCI World Index of 23 developed nations.

Yields on 10-year U.S. Treasuries climbed to 3.85 percent yesterday, the highest level since Jan. 8, as demand for the securities in an auction dropped. Ichiyoshi’s Akino said the higher yields spurred investors to snap up the dollar, causing the yen’s depreciation.

Portugal’s credit rating was lowered one step to AA- with a “negative” outlook, Fitch said yesterday, adding that further economic or fiscal underperformance this year or in 2011 may lead to another downgrade.