Asian stocks and oil fell as borrowing costs in Spain climbed to a euro-era record, fueling concern the debt crisis is deepening. The Australian dollar halted a three-day advance.
The MSCI Asia Pacific Index fell 0.2 percent at 9:20 a.m. in Tokyo as the Nikkei 225 Stock Average slid 0.3 percent. Oil in New York fell 0.1 percent to $83.17 a barrel. The so-called Aussie dropped 0.1 percent to $1.0111, before the Reserve Bank releases minutes of its June meeting at which it cut interest rates for a second straight month. Standard & Poor’s 500 Index futures were little changed.
Spain, which has asked euro-region governments for as much as 100 billion euros to help shore up its banks, reported yesterday that bad loans jumped in April to 8.72 percent of total lending, the highest since 1994. The 10-year Spanish yieldsurged above 7 percent. Group of 20 nations are discussing a mix of measures, including deficit reduction for some countries and pledges for additional stimulus by others with sounder finances, a Canadian official said as leaders prepare for a two-day summit in Mexico.
“We are positioned quite negatively,” said Tim Riordan, of Parker Asset Management Ltd., a hedge fund in Sydney that has about $200 million under management. “We see Europeescalating rather than solving its problems. The focus is rolling on to Spain, and with bond yields going over 7 percent, this has been a red flag in the past. You’re in a bit of a downward spiral and this leads us to be fairly cautious.”
The MSCI Asia-Pacific (MXAP) Index, which lost 10 percent through yesterday from this year’s highest level in February, is trading at 1.2 times book value, compared with 2.1 times for the S&P 500 and 1.3 times for the Stoxx 600, according to data compiled by Bloomberg. A number below one means companies can be bought for less than value of their assets.
The euro was little changed at $1.2590. Demand for the 17- nation euro was limited as Spain prepared to sell bills today. The Japanese yen climbed 0.2 percent.
Federal Reserve policy makers will bring new forecasts to their June 19-20 meeting today and probably will mark down their April central-tendency estimate for growth of 2.4 percent to 2.9 percent this year.
To contact Bloomberg News staff for this story: Chua Baizhen in Beijing at bchua14@bloomberg.net
To contact the editor responsible for this story: Nick Gentle atngentle2@bloomberg.net
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