Asian Shares Drop With Commodities; Europe Stocks Little Changed

By Pratish Narayanan & Adam Haigh

Asian stocks slumped as commodities dropped to the lowest level since July, led by copper and zinc, on concern a global economic recovery will flag. European stocks were little changed following their biggest four-day selloff since July.

The MSCI Asia Pacific Index (MXAP) was 1.1 percent lower at 8:12 a.m. in London, with materials producers down 2.4 percent. The Stoxx Europe 600 Index and 500 Index futures were little changed. The S&P GSCI Index of 24 commodities fell 0.2 percent, with copper below $7,000 a ton for the first time since October 2011. Zinc slumped 1.8 percent and nickel slid 1 percent, touching the lowest since July 2009. Metals are declining as finance ministers from around the world travel to Washington to discuss policies aimed at sustaining the global recovery. Data this week showed slower- than-expected Chinese economic growth and European car sales sliding to a 20-year low, while U.S. stocks dropped yesterday after disappointing results by companies from Bank of America Corp. to Textron Inc.

“Weak corporate earnings results and renewed concerns about the global economy saw traders switch to a risk-off mode,” said Matthew Sherwood, head of investment markets research in Sydney at Perpetual Investments, which manages about $25 billion.

Copper for delivery in three months on the London Metal Exchange plunged as much as 4 percent to $6,800 a metric ton and was recently at $6,904.

Bear Market

About 10 components of the 24 raw materials in the S&P GSCI Index are in a bear market, commonly defined as a drop of 20 percent or more from a closing high, according to data compiled by Bloomberg. China’s deadly bird-flu outbreak is rippling through industries from restaurants to travel, adding economic headwinds after last quarter’s unexpected slowdown.

About two stocks fell on the MSCI Asia Pacific Index for every one that rose. BHP Billiton Ltd., the world’s biggest mining company, sank 4.4 percent in Sydney. LG Display Co., which supplies touch screens for Apple Inc., dropped 4.8 percent inSeoul after audio-chip maker Cirrus Logic Inc. reported an inventory glut that suggests iPhone sales may fall short of expectations. Softbank Corp., Japan’s third-largest wireless carrier, lost 1.6 percent as a rival’s bid for Sprint Nextel Corp. gained shareholder support.

Global Markets

European stocks fell yesterday, led by automakers and commodity producers, sending the Stoxx 600 down 1.5 percent to the lowest level since Dec. 31. Today, SABMiller advanced 0.6 percent after the world’s second-largest brewer posted sales that topped forecasts. Nestle SA fell 1.6 percent after the largest food company reported its slowest first-quarter sales growth since 2009.

Nokia Oyj, Modern Times Group and Debenhams Plc are among companies in Europe that will release results today, while Verizon Communications Inc. and Microsoft Corp. are scheduled to report earnings in the U.S. Of the 61 companies on the S&P 500 (SPX) that have posted this season, 43 have beaten profit estimates, according to data compiled by Bloomberg.

China’s yuan retreated 0.14 percent to 6.1807 per dollar from a 19-year high yesterday after the central bank lowered the dailyreference rate by the most since August amid speculation the currency’s trading band will be expanded. Yi Gang, deputy governor of the People’s Bank of China, said the daily trading band will be further widened “in the near future.” China is under pressure from the G-20, which meets today in Washington, to loosen its grip on the yuan.

G-20 Meeting

The yen gained 0.2 percent to 97.93 per dollar, ahead of the G-20 meeting that will address its weakness. Government data showed the nation’s investors reduced their holdings of foreign bonds by 331.9 billion yen ($3.4 billion) in the week ended April 12 and exports exceeded estimates after declines in the yen. Overseas shipments rose 1.1 percent in March from a year earlier, the Finance Ministry said today, and the trade deficit narrowed to 362.4 billion yen from 777.5 billion yen in February.

WTI crude for May delivery dropped as much as $1.07 to $85.61 a barrel in electronic trading on the New York Mercantile Exchange. It was recently at $86.57.

“The market is coming back to reality that revisions in growth and gross domestic product have to translate into weaker demand,” said Jonathan Barratt, the chief executive officer of Barratt’s Bulletin, a commodity newsletter in Sydney. “There are more hard times to come.”

To contact the reporters on this story: Pratish Narayanan in Mumbai atpnarayanan9@bloomberg.net; Adam Haigh in Sydney at ahaigh1@bloomberg.net

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