Bloomberg News

Nikkei Futures Fall After Fitch Says Europe Threatens U.S. Banks

November 16, 2011

Nov. 17 (Bloomberg) -- Japanese stock futures fell after Fitch Ratings said a worsening European debt crisis is a “serious risk” to U.S. banks, stoking concern about the global financial system. Australian stocks were little changed.

American depositary receipts of Mitsubishi UFJ Financial Group Inc., Japan’s biggest lender by market value, dropped 2.5 percent from the closing share price in Tokyo. Those of Komatsu Ltd., the country’s largest maker of construction machinery, slid 1.5 percent. BHP Billiton Ltd., an Australian oil producer, rose 0.2 percent after oil climbed above $100 a barrel.

Futures on Japan’s Nikkei 225 Stock Average expiring in December closed at 8,390 in Chicago yesterday, down from 8,450 in Osaka, Japan. They were bid in the pre-market at 8,420 in Osaka, at 8:05 a.m. local time. Australia’s S&P/ASX 200 Index dropped 0.2 percent. New Zealand’s NZX 50 Index declined 0.1 percent in Wellington.

“This is a bad case for Europe and growth forecasters who were optimistic are definitely cutting back,” said Matt Riordan, who helps manage close to $6.4 billion in Sydney at Paradice Investment Management Pty. “We are going into quite a difficult point where some sort of a new strategy might be required.”

Futures on the Standard & Poor’s 500 Index fell 0.1 percent today. The index dropped 1.7 percent in New York yesterday after Fitch said further turmoil in Greece, Ireland, Italy, Portugal and Spain poses a “serious risk” to U.S. lenders. The risks are currently manageable, the ratings company said.

Stocks also fell after Bank of England Governor Mervyn King said Britain faces a “markedly weaker” economic outlook.

The MSCI Asia Pacific Index declined 16 percent this year through yesterday, compared with a 1.7 percent drop by the S&P 500 and a 14 percent loss by the Stoxx Europe 600 Index. Stocks in the Asian benchmark are valued at 12.6 times estimated earnings on average, compared with 12.5 times for the S&P 500 and 10.3 times for the Stoxx 600.

Crude for December delivery rose $3.22 to $102.59 a barrel on the New York Mercantile Exchange, the highest settlement since May 31.

--Editor: 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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