Most Asian Stocks Fall on China Policy Concern, Ireland Credit-Rating Cut

Bloomberg-----Most Asian stocks fell after Ireland’s credit rating was cut and amid speculation Chinese policy makers would raise interest rates to slow inflation in the world’s fastest-growing major economy.

Toyota Motor Corp., a Japanese carmaker that gets about 70 percent of its sales abroad, lost 1.4 percent after the euro weakened against the yen, damping the outlook for export profits. Industrial & Commercial Bank of China Ltd. retreated 0.5 percent in Hong Kong. Rio Tinto Group, the world’s third-biggest mining company, dropped 0.7 percent in Sydney as copper prices decreased from a 31-month high yesterday in New York.

About twice as many stocks declined as advanced on the MSCI Asia Pacific Index, which was little changed at 133.44 as of 7:42 p.m. in Tokyo. The gauge is unchanged this week, keeping it near a one-month high.

“Uneasiness around Europe’s sovereign-debt issues and the potential for further monetary-policy tightening by Chinese authorities has led investors to a more cautious stance,” said Tim Schroeders, who helps manage $1 billion in Melbourne at Pengana Capital Ltd. “Investors will probably want to adopt a wait-and-see attitude given the good gains in stock markets over recent months.”

The MSCI index slid 0.6 percent in November after jumping 11 percent the previous two months as concern grew that China’s anti-inflation measures, Europe’s debt crisis and tensions on the Korean peninsula may derail a global economic recovery. Consumer stocks led declines today.

Equity Indexes

Japan’s Nikkei 225 Stock Average dropped 0.7 percent. Hong Kong’s Hang Seng Index, Australia’s S&P/ASX 200 Index and South Korea’s Kospi Index were little changed. Taiwan’s Taiex index decreased 0.4 percent. China’s Shanghai Composite Index advanced 1.1 percent.

Futures on the Standard & Poor’s 500 Index gained 0.3 percent today. The index climbed 0.4 percent yesterday to a two- year high after Pacific Investment Management Co., the operator of the world’s largest bond fund, raised its forecast for economic growth and the U.S. Labor Department said applications for unemployment benefits fell.

Toyota, the world’s largest carmaker, lost 1.4 percent to 3,230 yen in Tokyo. Honda Motor Co., Japan’s second-biggest auto producer, lost 1.4 percent to 3,140 yen in Tokyo. Sony Corp., the maker of Bravia televisions and Cyber-shot cameras, declined 1.6 percent to 2,993 yen.

Carmakers Lead Declines

The group that includes Toyota, Honda and Sony had the biggest percentage drop among the 10 industries in the MSCI Asia Pacific Index. Toyota was the heaviest single drag on the gauge by index points.

Fitch Ratings cut its credit rating on Ireland by three levels to the lowest grade among the major rating companies after the country sought international assistance last month to rescue its banks. The euro depreciated against 12 of its 16 most-traded counterparts following the rating reduction.

“Investors are concerned European debt issues will worsen,” said Juichi Wako, a senior strategist at Tokyo-based Nomura Holdings Inc., Japan’s biggest brokerage. “Investors may sell exporters, which led market gains in November, on the weaker euro against the yen.”

The MSCI Asia Pacific Index climbed 11 percent this year through yesterday, compared with gains of 11 percent by the Standard & Poor’s 500 Index and 8.7 percent by the Stoxx Europe 600 Index. Shares in the Asian benchmark valued at 14.7 times estimated earnings on average at yesterday’s close, versus 14.5 times for the S&P 500 and 12.3 times for the Stoxx 600.

Commodities Drop

Rio Tinto fell 0.7 percent to A$87.36 in Sydney. OZ Minerals Ltd., an Australian copper and gold miner, sank 2.4 percent to A$1.63. Aluminum Corporation of China Ltd., the nation’s biggest producer of the metal, lost 1.1 percent to HK$7.03 in Hong Kong.

Copper prices for March delivery fell in New York on speculation that China, the world’s biggest metal consumer, may raise interest rates to slow economic growth and inflation. The London Metal Exchange Index of six metals including copper and aluminum slipped 0.8 percent yesterday, the first drop this week.

In Tokyo, Mitsubishi Corp., Japan’s biggest commodities trader, retreated 0.7 percent to 2,162 yen. Fanuc Ltd., which is the country’s No. 1 maker of industrial robots and gets more than half its sales in Asia outside Japan, lost 1.9 percent to 12,350 yen. It was the heaviest drag on the Nikkei 225.

China Economy Summit

China’s leaders will in coming days lay a course for policy in 2011 that will help determine whether the world’s fastest- growing major economy will succeed in reining in inflation without hobbling the nation’s expansion.

President Hu Jintao and Premier Wen Jiabao convene the so- called Central Economic Work Conference, a three-day conclave in Beijing, starting today, Bloomberg Businessweek reports in its Dec. 13 edition. Attendees include the heads of the top government ministries and China’s largest state enterprises.

Industrial & Commercial Bank of China, the world’s largest bank by market value, sank 0.5 percent to HK$5.83 in Hong Kong. China Overseas Land & Investment Ltd., the Hong Kong-listed developer controlled by China’s construction ministry, declined 1.2 percent to HK$15.02. PetroChina Co., the nation’s biggest oil and gas producer, retreated 1.3 percent to HK$9.83.

Shangri-La Asia Ltd., which is Asia’s biggest luxury-hotel operator and gets 60 percent of sales from China and Hong Kong, slumped 4 percent to HK$19.88 after saying it will sell shares at a discount to existing shareholders.

After the close of Asian stock trading, China’s central bank said it will raise the amount the nation’s lenders must hold as reserves by 50 basis points.

Sapporo Surges

Among stocks that rose, Sapporo Holdings Ltd., Japan’s fourth-largest beer brewer, jumped 8.9 percent to 367 yen in Tokyo, the biggest increase in the MSCI Asia Pacific Index. Warren Lichtenstein’s Steel Partners further reduced its stake in the company after losing a shareholder vote.

“This may signal an end to Steel Partners’ battle with Sapporo,” said Tsuyoshi Segawa, a strategist in Tokyo at Mizuho Securities Co. “The brewer can now focus on its main business, instead of spending time to deal with the fund.”

Hanjin Shipping Co., South Korea’s largest container line, advanced 2.7 percent to 34,900 won in Seoul after saying that it plans to increase rates on trade to Europe from Asia next year.