Asian Stocks Drop, Yen Weakens as Hatoyama Quits in Japan; Metals Decline
http://preview.bloomberg.com/news/2010-06-02/yen-weakens-as-hatoyama-quits-chinese-shares-fall-to-lowest-in-13-months.html
PM Jepun nak resign....
Asian stocks fell for a second day, led by the Nikkei 225 Stock Average, while the yen weakened and metals declined after Japan’s prime minister said he will resign.
The MSCI Asia Pacific Index lost 1.1 percent to 111.01 and the Nikkei slid 1.2 percent at 2:30 p.m. in Tokyo. U.S. stock index futures were little changed after the Standard & Poor’s 500 plunged 1.7 percent yesterday. The yen weakened against 15 of its most-traded counterparts. Copper skidded 1.6 percent.
Japanese Prime Minister Yukio Hatoyama said he’ll step down, less than two months before elections, raising concerns that the world’s second-largest economy will continue to sputter at the same time that China takes steps to cool growth and European nations struggle amid record deficits.
“It’s hard to say that Japan’s economy will do better on this change,” said Ayako Sera, a strategist at Tokyo-based Sumitomo Trust & Banking Co., which manages $307 billion. “On a long-term view, there is still a sense of uncertainty.”
Four stocks fell for every three that rose in the MSCI Asia benchmark, led by industrials and commodities producers. Energy companies slumped in Asian trading after U.S. Attorney General Eric Holder said the Justice Department is investigating whether any criminal or civil laws were violated in the BP oil spill.
Mitsui & Co., which owns a stake in oil and gas fields in the Gulf of Mexico, sank 7.3 percent in Tokyo. Inpex Corp., Japan’s largest energy explorer, dropped 1.6 percent. BHP Billiton Ltd., Australia’s largest oil and gas producer, declined 0.6 percent. The company said it was studying the impact of a U.S. moratorium on drilling in the Gulf of Mexico.
Spill Fallout
“Regulations on drilling for crude oil may tighten after the oil leak,” said Hiroichi Nishi, an equities manager in Tokyo at Nikko Cordial Securities Inc. “That may spur concerns that the earnings environment for resources-related companies, including major trading firms, will worsen.”
China’s Shanghai Composite Index fell 1.6 percent, heading to the lowest close in 13 months. Bank of China plunged 6.1 percent as the lender began a 40 billion yuan ($5.9 billion) convertible bond sale. Industrial Bank slid 7.1 percent.
“Investors are concerned about fundraising, which increases the number of shares outstanding and dilutes earnings,” said Wang Zheng, a fund manager at Jingxi Investment Management Co. in Shanghai.
S&P 500 futures were little changed. The index fell 1.7 percent yesterday after Agence France-Presse said Lebanon’s military fired at Israeli warplanes.
Yen Depreciates
The yen weakened to as much as 91.79 against the dollar in Tokyo from 90.94 yesterday in New York. The Japanese currency depreciated to as low as 112.50 per euro from 111.22. The euro changed hands at $1.2253 from $1.2229 yesterday when it touched $1.2111, the weakest since April 2006.
“Emerging signs of political instability in Japan will gradually start to negatively impact the status of the yen,” said Masakazu Sato, a foreign-exchange adviser at foreign exchange margin company Gaitameonline Co. “Foreign investors normally dislike political instability.”
Ichiro Ozawa, the ruling Democratic Party of Japan’s top campaign strategist, will step down as secretary-general, Hatoyama said. The resignations come less than two months before mid-term elections, endangering the DPJ’s prospects and hindering its efforts to reduce the public debt and push through legislation to expand the country’s postal system. The government will retain power regardless of the result because of its majority in the lower chamber.
Metals Fall
Copper dropped for a third day, extending a decline to the lowest price in more than a week, on concern that demand will fall as manufacturing growth slows in China and Europe. Three- month delivery copper dropped on the London Metal Exchange to $6,645 a metric ton, the lowest level since May 21. Nickel slumped 3.1 percent to $19,857 a ton, the lowest price since Feb. 18. Oil for July delivery dropped 31 cents, or 0.4 percent, to $72.27 a barrel on the New York Mercantile Exchange. Prices have swung between gains of 0.5 percent and losses of as much as 1.1 percent today.
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