Asian Stocks Fall, Snapping 11-Day Rally, Ahead of Fed

Asian stocks fell, with the regional benchmark index snapping an 11-day rally, as the U.S. and Russia hold talks on Syria and investors await the outcome of a Federal Reserve meeting next week.

BHP Billiton Ltd. (BHP), the biggest mining company, slipped 1 percent in Sydney as metal futures headed for a weekly decline. Mitsui OSK Lines Ltd., which has the world's largest merchant shipping fleet, fell 3.5 percent after a gauge of freight rates halted an eight-day rally. Sun Hung Kai Properties Ltd., the world's No. 2 developer by market value, dropped 1.4 percent in Hong Kong after setting a lower sales target this year.

The MSCI Asia Pacific Index fell 0.6 percent to 136.90 as of 5:17 p.m. in Tokyo, halting its longest stretch of gains this year, as three shares fell for every two that rose. The gauge is poised for a 2.3 percent gain this week. The measure's 14-day relative strength index, an indicator of trading momentum, climbed to 67 yesterday, near a threshold of 70 that signals to some analysts shares may have risen too far.

"Investors paused for thought in the wake of the market's recent strong run," Matthew Sherwood, who helps oversee about $25 billion as head of markets research in Sydney at Perpetual Investments, said in an e-mail. "The global economic rebound still remains fragile and below trend, and earnings growth forecasts are extremely optimistic for this environment."

Euro-area industrial output fell more than analysts estimated in July as the region struggled with high unemployment. Australia's jobless rate last month reached a four-year high, while claims for unemployment benefits in the U.S. last week fell. Japan's industrial output increased 1.8 percent in July from a year earlier, faster than a preliminary estimate of 1.6 percent, the government reported today.

Regional Gauges

The Hang Seng China Enterprises Index (HSCEI) of mainland companies traded in Hong Kong declined 0.9 percent. The so-called H-share index climbed 20 percent from a June 25 low earlier this week, entering what some investors consider a bull market, amid signs China's economy is improving. China's Shanghai Composite Index (SHCOMP) slipped 0.9 percent and Hong Kong's Hang Seng Index dropped 0.2 percent today.

Australia's S&P/ASX 200 Index fell 0.4 percent and South Korea's Kospi index both dropped 0.5 percent. Taiwan's Taiex index slid 0.7 percent and Singapore's Straits Times Index was little changed. Japan's Topix index added 0.1 percent, erasing losses of as much as 0.8 percent. New Zealand's NZX 50 Index rose 0.2 percent.

Best Performer

The Topix (TPX) has advanced 7.2 percent this month amid optimism about Tokyo hosting the 2020 Summer Games, taking its gains for the year to 38 percent, the best among developed markets tracked by Bloomberg.

Japan is considering a reduction in corporate-income taxes as part of a stimulus package to cushion the economy from the planned increase in the sales levy, according to three people briefed on the matter.

Futures on the Standard & Poor's 500 Index slid 0.1 percent. The gauge fell 0.3 percent yesterday in New York, snapping the longest streak of gains since July.

U.S. jobless claims declined last week to 292,000, the fewest since April 2006, as upgrades to computer systems in two states caused employment agencies to report fewer applications. An agency spokesman said the upgrades played a major role in the drop in claims. Economists were expecting an increase to 330,000 from 323,000 in the previous week.

Fed Stimulus

The U.S. central bank has said any reduction in stimulus will be tied to a sustained recovery in employment. The Federal Reserve will decide to cut its $85 billion in monthly bond purchases when it meets Sept. 17-18, according to 65 percent of economists surveyed by Bloomberg last month.

U.S. Secretary of State John Kerry is in Geneva to meet with Russian counterpart Sergei Lavrov over a deal for the removal of Syria's chemical weapons. Syrian President Bashar al-Assad said any deal to surrender the nation's chemical arsenal must be a "two-way street" in which the administration of President Barack Obama drops its military threats and stops arming Syrian rebels.

The MSCI Asia Pacific Index climbed 6.4 percent this year through yesterday. Shares on the Asia-Pacific gauge traded at 13.4 times estimated earnings, compared with 15.2 times for the S&P 500 and 14.2 for Stoxx Europe 600 Index, according to data compiled by Bloomberg.

All but one of the 10 industries in the Asia-Pacific gauge declined, led by raw-material producers, as copper, gold and oil futures headed for weekly losses of more than 1 percent.

BHP, Newcrest

BHP Billiton fell 1 percent to A$36.20. Newcrest Mining Ltd. (NCM), Australia's biggest gold producer, dropped 1.7 percent to A$12.02. Jiangxi Copper Co., China's largest producer of the metal, sank 4.2 percent to HK$16 in Hong Kong. Inpex Corp., Japan's top energy explorer, slipped 1.4 percent to 455,000 yen.

Shipping companies retreated after the Baltic Dry Index (BDIY), which measures the cost of transporting commodities from copper to corn, fell for the first time in nine days yesterday in London.

Mitsui OSK dropped 3.5 percent to 445 yen in Tokyo. China Shipping Development Co., which transports oil and coal, slumped 6.5 percent to HK$4.45 in Hong Kong. Pacific Basin Shipping Ltd. (2343), Hong Kong's biggest bulk carrier, dropped 3.5 percent to HK$5.17.

Sun Hung Kai Properties decreased 1.4 percent to HK$101.70. The builder plans to sell HK$28 billion ($3.6 billion) of homes in Hong Kong and mainland China in the year through June 2014, Deputy Managing Director Victor Lui said at a briefing in the city yesterday. That compares with home sales of HK$32.9 billion a year earlier.

Share Sale

Semiconductor Manufacturing International Corp. (981) slid 3.5 percent to 55 Hong Kong cents. Investors are seeking to raise as much as $40 million, selling the chipmaker's shares at 53 to 55 Hong Hong cents each, according to a term sheet obtained by Bloomberg.

Manila Water Co., the Philippine utility company partly owned by Ayala Corp., tumbled 15 percent to 26.50 pesos after the government rejected petitions to increase rates and ordered a cut in tariffs. Metro Pacific Investments Corp., owner Maynilad Water Services Inc., slid 6.4 percent to 4.40 pesos. Ayala Corp. lost 0.9 percent to 558 pesos.