Asian stocks dropped, led by Nissan Motor Co. and Posco, after economic reports in China and the U.S. fueled concern both nations' central banks will slow growth with higher interest rates. Morgan Stanley Capital International's Asia-Pacific Index, which tracks more than 900 stocks in the region, slid 1.8 percent to 87.88, its first drop in four days, at 1:03 p.m. in Tokyo. Stocks also declined after oil prices in New York yesterday had the biggest advance in more than two weeks. ``Higher interest rates will mar the outlook for economic growth,'' said Hiroshi Mizutani, who helps manage $3.7 billion in equities at Asahi Life Asset Management Co. in Tokyo. ``A rise in oil prices means higher costs for manufacturers, which will be negative for their earnings.''
Japan's Nikkei 225 Stock Average shed 2.3 percent, its biggest slide in a month, to 11,342.05. South Korea's Kospi index lost 3.1 percent to 736.76, while Hong Kong's Hang Seng Index dropped 2 percent to 11,841.06. China's property investment surged almost a third in the first five months of this year, the National Bureau of Statistics said on its Web site. The central bank will hold its quarterly monetary policy meeting in Beijing today, in which some analysts said interest-rate policy would be discussed. Nissan, Japan's second-biggest automaker, slid 3.2 percent to 1,097 yen. Posco, South Korea's largest steelmaker, dropped 3.9 percent to 134,500 won. More than a third of the steel company's exports went to China last year. All other benchmarks in markets opened for trading fell, apart from those in Australia, New Zealand and Sri Lanka.
`Too Stimulative'
U.S. producer prices, a measure of what factories, farmers and other producers receive for their goods, rose 0.8 percent, the biggest gain in a more than a year, the Labor Department said. The Federal Reserve's Open Market Committee will meet June 29-30. Economists polled by Bloomberg News predict the Fed will boost its benchmark overnight lending rate to 1.25 percent from 1 percent. Michael Moskow, president of the Federal Reserve Bank of Chicago said the Fed must begin to raise its benchmark interest rate to keep inflation under control. Almost two-thirds of the 303 fund managers questioned this month in a Merrill Lynch & Co. survey said rates were ``too stimulative,'' up from 35 percent who said so in May. Some 70 percent of equity managers said the Federal Reserve may need to at least triple its key rate to 3 percent before it reaches an appropriate level, the survey said. Oil Prices Oil prices yesterday surged 3.1 percent, the biggest jump since June 1, to $38.46 on the New York Mercantile Exchange. On Wednesday, Japan's government in its monthly economic assessment said the gain in oil prices is an immediate threat to economic expansion. ``Concerns about inflation in the U.S. and high oil prices are pulling down stocks,'' said Yang You Sik, who manages the equivalent of $432 million at LG Investment Trust Management Co. in Seoul. China Mobile (Hong Kong) Ltd., the world's largest mobile- phone operator by subscribers, slumped 2.4 percent to HK$22.20. Sinopec Beijing Yanhua Petrochemical Co., China's largest maker of plastics, tumbled 6.7 percent to HK$2.10. LG Chem Ltd., South Korea's largest chemical maker, dropped 4.7 percent to 34,850 won. Venture Corp., Singapore's largest electronics maker for companies such as Hewlett-Packard Co., lost 2.3 percent to S$17.30.
Australia Advances
Australia's S&P/ASX 200 Index rose 0.5 percent to 3526.20, extending yesterday's record. Miners such as BHP Billiton and WMC Resources Ltd. paced gains as metal prices climbed. ``Some metals prices are still exceptionally low, including nickel,'' said Tim Barker, who helps manage $30 billion of assets, including mining stocks, at BT Financial Group in Sydney. ``Supplies are diminishing and demand is strong, so they could move higher.'' BHP Billiton, the world's biggest miner, gained 1.1 percent to A$12.37. WMC Resources, the world's third-biggest nickel concentrate producer, rose 1.4 percent to A$4.92. Nickel surged 8.1 percent to an 11-week high in London as stockpiles fell to three-year lows.
Morgan Stanley Capital International Inc. is due later today to announce whether it will give full weight to Taiwan's stocks in its global indexes. Taiwanese companies, which make up Asia's fifth-largest stock market by value, have about 55 percent of their market value represented in the indexes. With full inclusion, Taiwan will become the second-largest country represented in the MSCI Asia-Pacific excluding Japan Index, behind Australia. About $41 billion in index-tracking funds are benchmarked to the measure, according to Nomura International (H.K.) Ltd. ///www.bloomberg.com