Japanese Stock Futures, Australian Index Decline on China Rates

Oct. 20 （Bloomberg） -- Japanese stock futures and Australian shares fell after China, the world's fastest-growing major economy, unexpectedly raised its lending and deposit rates to curb inflation.

American depositary receipts of Canon Inc., a Japanese camera maker that gets about 80 percent of its revenue overseas, fell 1.1 percent from the closing share price in Tokyo. Those of Toyota Motor Corp., the world's largest carmaker, slid 0.5 percent. ADRs of Mitsubishi UFJ Financial Group Inc., Japan's biggest publicly traded lender, lost 0.9 percent after Barclays Plc cut its investment rating on the stock. BHP Billiton Ltd., the world's largest mining company and Australia's biggest oil producer, sank 1.4 percent today after commodity prices tumbled.

"A slowdown in the Chinese economy may slow the speed of recovery in the global economy," said Hiroichi Nishi, an equities manager in Tokyo at Nikko Cordial Securities Inc.

Futures on Japan's Nikkei 225 Stock Average expiring in December closed at 9,480 in Chicago yesterday, compared with 9,525 in Singapore. They were bid in the pre-market at 9,480 in Osaka, Japan, at 8:05 a.m. local time. Australia's S&P/ASX 200 Index slid 1 percent today, led by materials producers. New Zealand's NZX 50 Index fell 0.6 percent in Wellington.

Futures on the Standard & Poor's 5001 Index retreated 0.2 percent. The index lost 1.6 percent yesterday in New York, the biggest drop since Aug. 19, amid concern banks will be forced to buy back soured mortgages and after Apple Inc. forecast profit that missed analyst estimates as supply constraints hamper sales of the iPad computer.

China Raises Rates

China's central bank raised one-year lending and deposit rate by 25 basis points, boosting borrowing costs for the first time since 2007. Policy makers are trying to curb lending and prevent an asset-price bubble in a country that surpassed Japan this year as the world's second-largest economy.

The move comes days before finance ministers and central bankers from the Group of 20 countries gather in South Korea to discuss the global economy amid disagreements on whether the yuan is undervalued.

The dollar rallied the most in two months against a basket of currencies including the euro and yen. The yen depreciated to as low as 81.67 against the dollar today in Tokyo, compared with 81.53 at the close of stock trading yesterday, boosting the value of overseas income at Japanese companies when repatriated.

"The stronger dollar will benefit Japanese stocks," Nikko Cordial's Nichi said.

Commodity Prices Tumble

Crude oil for November delivery sank 4.3 percent to settle at $79.49 a barrel yesterday in New York, the steepest drop since Feb. 4, on concern the rate increase in China will crimp demand in the world's biggest energy-using country.

The London Metal Exchange Index of six metals including aluminum and copper lost 2.1 percent yesterday, the largest decline since Oct. 7. The Baltic Dry Index of commodity-shipping rates slid for a third consecutive day yesterday.

The MSCI Asia Pacific Index has increased 7.8 percent in 2010, compared with gains of 4.6 percent by the S&P 500 and 4.5 percent by the Stoxx Europe 600 Index. Stocks in the Asian benchmark are valued at 14.2 times estimated earnings, compared with 13.9 times for the S&P and 12.2 times for the Stoxx.

Barclays cut its rating yesterday on Resona Holdings Inc., a Japanese bank, in addition to Mitsubishi UFJ.