Bloomberg News

Japan Stock Futures, Australian Shares Fall on Europe Concern

October 25, 2011

Oct. 26 (Bloomberg) -- Japanese stock futures and Australian shares fell as uncertainty grew over how much progress European leaders are making on a plan to fight the sovereign-debt crisis ahead of a summit today in Brussels.

American depositary receipts of Nissan Motor Co., Japan’s third-largest carmaker by market value that gets 15 percent of its revenue in Europe, fell 1.5 percent from the closing share price in Tokyo. Those of Mitsubishi Corp., a Japanese trading company, slid 1.2 percent after United Parcel Service Inc. slumped as declining shipments from Asia to the U.S. curbed growth in the company’s international business. BHP Billiton Ltd., the world’s biggest mining company, slid 1.5 percent in Sydney after metal prices fell.

Futures on Japan’s Nikkei 225 Stock Average expiring in December closed at 8,700 in Chicago yesterday, down from 8,770 in Osaka, Japan. They were bid in the pre-market at 8,720 in Osaka at 8:05 a.m. local time. Australia’s S&P/ASX 200 Index dropped 1 percent today. New Zealand’s NZX 50 Index fell 1.1 percent in Wellington.

“At the end of the day, every asset class globally will be hostage to the announcements out of Europe,” said Prasad Patkar, who helps manage about $1 billion at Platypus Asset Management Ltd. in Sydney. The market “is still being volatile, but I don’t think there’s any directional implication to it until we know what happens in Europe.”

European Summit

Futures on the Standard & Poor’s 500 Index were little changed today. In New York, the index fell 2 percent yesterday as the cancellation of a meeting of European Union finance ministers spurred concern that the region’s leaders will fail to agree on how to tame the sovereign-debt crisis. European leaders will hold a summit today in Brussels as they seek to bolster the region’s rescue fund, recapitalize banks and provide debt relief to Greece.

UPS reduced its airlift capacity for Asia as shipments to the U.S. decreased, the Atlanta-based company said after announcing third-quarter earnings. International deliveries overall increased 4.6 percent, trailing the 6.2 percent gain in the previous three months. UPS fell 2.1 percent to $69.35 in New York.

U.S. stocks extended losses yesterday after consumer confidence unexpectedly slumped in October to the lowest level since March 2009, when the economy was in a recession. A separate report showed home prices in 20 U.S. cities dropped more than forecast in August, highlighting one of the obstacles facing the economic recovery in its third year.

The MSCI Asia Pacific Index declined 13 percent this year through yesterday, compared with a 2.3 percent loss by the S&P 500 and a 13 percent drop by the Stoxx Europe 600 Index. Stocks in the Asian benchmark are valued at 12.1 times estimated earnings on average, compared with 12.4 times for the S&P 500 and 10.3 times for the Stoxx 600.

The London Metal Exchange Index of prices for six industrial metals including copper and aluminum fell 1.1 percent yesterday.

--Editors: John McCluskey, Jason Clenfield.

To contact the reporter on this story: Yoshiaki Nohara in Tokyo at ynohara1@bloomberg.net

To contact the editor responsible for this story: Nick Gentle at ngentle2@bloomberg.net.


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