Bloomberg News

Japanese Stock Futures, Australian Shares Fall on Italian Debt

November 09, 2011

Nov. 10 (Bloomberg) -- Japanese stock futures and Australian shares fell after a surge in Italy’s bond yields stoked concern the debt-stricken nation may need to seek a bailout.

American depositary receipts of Sumitomo Mitsui Financial Group Inc., Japan’s second-biggest lender, fell 3.6 percent from the closing share price in Tokyo. Those of Sony Corp., Japan’s No. 1 exporter of consumer electronics that gets 21 percent of its sales in Europe, lost 3.5 percent. The world’s two largest miners, BHP Billiton Ltd. and Rio Tinto Group, slid at least 3.2 percent in Sydney after commodity prices dropped.

Futures on Japan’s Nikkei 225 Stock Average expiring in December closed at 8,595 in Chicago yesterday, down from 8,730 in Osaka, Japan. They were bid in the pre-market at 8,600 in Osaka at 8:05 a.m. local time. Australia’s S&P/ASX 200 Index slumped 3.2 percent today, the biggest drop since Sept. 12, while New Zealand’s NZX 50 Index fell 1.2 percent in Wellington.

“The big concern is that Italy will need to get its funding from other sources than the market, but because of its size, people are very worried,” said Stephen Halmarick, Sydney- based head of investment markets research at Colonial First State Global Asset Management, which oversees about $150 billion. “The outcome of all this is the European economy will go into recession. That’s a big negative.”

Bailout Concerns

Futures on the Standard & Poor’s 500 Index fell 0.1 percent today. In New York, the index fell 3.7 percent yesterday after Italy’s 10-year bond yield surged to a euro-era high of 7.25 percent as the promised exit of Prime Minister Silvio Berlusconi failed to convince investors that the country can slash Europe’s second-largest debt burden. The 7 percent threshold prompted Greece, Portugal and Ireland to seek bailouts.

In Greece, Prime Minister George Papandreou’s drive to put together a unity government descended into disarray as rival parties fell to squabbling over the next premier, undermining their bid to secure funds needed to prevent a collapse.

The MSCI Asia Pacific Index fell 13 percent this year through yesterday, compared with a 2.3 percent loss by the S&P 500 and a 14 percent decline by the Stoxx Europe 600 Index. Stocks in the Asian benchmark are valued at 12.9 times estimated earnings on average, compared with 12.4 times for the S&P 500 and 10.2 times for the Stoxx 600.

The London Metal Exchange Index of prices for six industrial metals including copper and aluminum fell 1.9 percent yesterday.

Oil Falls

Crude oil for December delivery dropped $1.06 to settle at $95.74 a barrel on the New York Mercantile Exchange. The Thomson Reuters/Jefferies CRB Index of raw materials fell 1.3 percent yesterday, snapping a five-day gain.

Shares of Olympus Corp., a Japanese optical-equipment maker, may be active after falling yesterday by the daily limit for a second day. Former company officials face as long as a decade in prison if investigations into the company’s claims that they hid decades of losses lead to convictions for fraud, falsification of financial statements or aggravated breach of trust.

The Tokyo Prosecutor’s Office is investigating Olympus on suspicion the company broke securities laws after the company admitted wrongdoing.

--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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