Asian Stocks Drop on U.S. Data, China; Yen Gains Against Euro

By Clyde Russell and Kana Nishizawa
April 16 (Bloomberg) -- Asian stocks dropped from a 20- month high after U.S. jobless claims rose and China took steps to cool its real-estate market. The yen strengthened on prospects Greece will struggle to control the widest budget deficit in the euro region, while the pound weakened.
The MSCI Asia Pacific Index slid 0.8 percent to 128.03 at 4 p.m. in Tokyo. The Stoxx Europe 600 decreased 0.5 percent to 270.89. Standard & Poor’s 500 futures declined 0.5 percent as Google Inc. posted disappointing first-quarter profit. The yen traded at 125.63 per euro, the strongest since April 9.
U.S. jobless claims unexpectedly rose last week and China’s government increased requirements for down payments on some home purchases, increasing investor concerns that this year’s 6 percent increase in the MSCI World Index may not be justified by the pace of the economic rebound. While the U.S. is "on the right track," it’s "important not to lose sight of just how fragile this recovery is," Federal Reserve Bank of San Francisco President Janet Yellen said in a speech yesterday.
"Investors believe that the growth outlook is continuing to improve, and they’re trying to buy opportunities," said Angus Gluskie, who oversees $300 million at White Funds Management Pty. in Sydney. "But overall at the moment, people are a bit cautious about having too much risk on the table."
Japan’s Nikkei 225 Stock Average and Hong Kong’s Hang Seng Index sank 1.5 percent. The drop in S&P 500 futures indicates that the benchmark’s six-day streak of advances may falter today.
The index rose 0.1 percent yesterday.

Google’s Results

Google reported first-quarter net income rose 37 percent to
$1.96 billion, or $6.06 a share. Excluding some costs, profit was $6.76 a share. Estimates compiled by Bloomberg were as high as $6.91. Google fell as much as 5.3 percent yesterday in after- hours trading to $563.50.
The U.S. earnings season continues next week with Microsoft Corp., American Express Co. and Coca-Cola Co. reporting their latest quarterly results. Combined profit for S&P 500 companies will increase 30 percent in the first quarter from a year earlier, according to analyst estimates compiled by Bloomberg.
Japanese exporters slid as the yen strengthened. Sony Corp., which gets 23 percent of sales in the U.S., lost 1.8 percent to 3,350 yen. Honda Motor Co., which gets 44 percent of its sales in North America, dropped 1.4 percent to 3,220 yen.
China stocks dived after the country’s cabinet yesterday said "more forceful" steps are needed to cool real estate speculation. China’s economic growth in the first quarter hit
11.9 percent, the fastest pace in almost three years.

Stocks Dive

Komatsu Ltd., a maker of construction machinery that counts China as its fastest-growing market, lost 1.3 percent to 1,918 yen. Industrial & Commercial Bank of China Ltd. and China Construction Bank Corp., the nation’s top two listed lenders, both plunged more than 2.3 percent.
BHP Billiton Ltd., the world’s biggest mining company, retreated 0.8 percent to A$43.54 in Sydney, as copper and oil futures in New York fell for a second day. Woodside Petroleum Ltd., Australia’s second-biggest oil and gas producer, declined 1.6 percent to A$46.72. Santos Ltd., the third largest, dropped
1.7 percent to A$14.42.
In electronic trading, oil for May delivery dropped 0.9 percent to $84.75 a barrel in New York. Copper decreased 0.4 percent to $7,916 a metric ton in London.
China’s stock-index futures rose on their first day of trading. The four main contracts on the CSI 300 Index, tracking the 300 biggest stocks on the Shanghai and Shenzhen bourse, advanced from their base value of 3,399. The May contract climbed to 3,450, the June contract increased to 3,470, the September contract gained to 3,600 and the December contract rose to 3,618.

Risk Hedge

The futures will allow investors to hedge risks and make equities cheaper in the long-term, according to Michael Kurtz, head of China research at Macquarie Group Ltd. The Shanghai Composite Index, which rallied 80% last year, has plunged 142 percent so far this year, the most among major global markets.
The pound weakened against 15 of 16 major counterparts and fell 1.1 percent to 142.55 yen amid concern elections on May 6 will leave the British government without a parliamentary majority and weaken the government’s ability to tackle the U.K.’s budget deficit. Liberal Democrat Nick Clegg won three instant polls in a debate with U.K. Prime Minister Gordon Brown and Conservative David Cameron. The results may mean Labour and the Conservatives don’t have enough support for either to control Parliament after the vote, political analysts said.

Greece Seeks Meeting

Greek Prime Minister George Papandreou yesterday asked for a meeting with the European Union, the International Monetary Fund and the European Central Bank. Talks will begin in Athens on April 19. The yield on Greece’s benchmark 10-year government bond surged to as high as 7.381 percent yesterday, higher than the level before the rescue package was announced on April 11.
The premium investors demand to buy Greek debt over comparable German bonds has more than doubled since Dec. 1 on concern that Greece would struggle to trim the deficit and fund its rising debt.
"Risk appetite is being tempered by a flaring up of concerns over European sovereign risk," said Mike Jones, a currency strategist at Bank of New Zealand Ltd. in Wellington.
"This may limit near-term gains in the euro, and underpin demand for ‘safe haven’ currencies."
South Korea’s won weakened 0.2 percent to 1,110.23 per dollar, retreating from its strongest level since September 2008 after the government reported the smallest increase in department store sales in eight months. Malaysia’s ringgit dropped 0.3 percent to 3.2024 per dollar as Greek debt and China tightening concerns damped appetite for emerging-market assets.