Asian Stocks Drop to Five-Week Low; BHP, Nippon Mining Decline

Asian stocks fell to a five-week low, led by BHP Billiton, Nippon Mining Holdings Inc. and PetroChina CO., on concern copper and crude oil will extend declines amid signs of cooling demand in the U.S., Japan and China.

“The outlook for global growth still doesn’t bode well for commodities demand,” said Angus Gluskie, who helps manage $270 million at White Funds Management in Sydney. “Resources stocks still have a long way to fall before their share prices start to interest me again.”

The Morgan Stanley Capital International Asia-Pacific Index lost 0.5 percent to 125.75 at 4:40 p.m. in Tokyo, its lowest since Aug. 7. The measure dropped 1.9 percent yesterday, the biggest slide in seven weeks.

Australia’s S&P/ASX 200 Index declined 1 percent, while Japan’s Nikkei 225 Stock Average lost 0.5 percent to 15,719.34. Markets also fell in South Korea, Singapore, Taiwan, New Zealand, Malaysia, the Philippines and Indonesia. They rose elsewhere.

Li & Fung Ltd., which sells goods to Wal-Mart Stores Inc., gained on speculation cheaper energy costs will help sustain U.S. consumer demand. Keppel Corp. and SembCorp Marine Ltd. fell on concern the drop in crude oil will reduce sales of oil rigs.

The MSCI Asia-Pacific Materials Index slid 2.3 percent, the regional measure’s worst-performing industry group. BHP, the world’s largest mining company, tumbled 5.7 percent to A$24.65.

A measure of six metals traded on the London Metal Exchange, including copper and zinc, slumped 4.6 percent yesterday. Copper fell 4.6 percent, the biggest decline since Aug. 17. Aluminum slid 5.4 percent, nickel lost 1.8 percent and zinc dropped 6.9 percent. China is the world’s largest consumer of copper.

`Under Pressure’

Nippon Mining, Japan’s biggest copper producer, slumped 4.2 percent to 817 yen. Korea Zinc Co., the world’s biggest zinc smelter by production, retreated 9.9 percent to 75,200 won.

Investors should be wary of commodity-related shares because a slowdown in U.S. economic growth may dent demand for crude oil and metals, according to Christopher Wood, CLSA Ltd.’s global equities strategist. The International Monetary Fund estimates the U.S. economy, the world’s largest, will grow 3.4 percent this year, slower than 2005′s 3.5 percent.

“As more evidence of a U.S. slowdown materializes, commodity prices will come under pressure,” the Jakarta-based strategist said. “That makes me cautious on commodity stocks in the near term.” Wood was ranked the second-best Asian strategist in Institutional Investor’s 2006 survey.

Japan, China

Woodside Petroleum Ltd., Australia’s No. 2 oil and gas producer after BHP, slumped 6.9 percent to A$35.87. Santos Ltd., Australia’s third-biggest oil and gas producer, fell 3.6 percent to A$10.43. PetroChina, China’s biggest oil and gas company, fell 1.1 percent to HK$8.20.

Consumers in Japan became more pessimistic in August and China’s investment in roads, factories and housing cooled, according to official reports released today by the two nation’s governments. The countries are Asia’s biggest economies and the world’s largest oil consumers after the U.S.

Crude oil yesterday dropped 1 percent to $65.61 a barrel in New York, the lowest close since March 27. Prices have fallen in the past six days, the longest decline since October 2003. The contract recently traded at $66.10.

Li & Fung added 2.3 percent to HK$17.96. Yue Yuen Industrial (Holdings) Ltd., the world’s largest maker of sports shoes for brands such as Nike Inc. and Reebok International Ltd., climbed 1.1 percent to HK$22.60.

“Consumer demand is still there and that benefits the exporters,” said Lilian Co, a fund manager at Baring Asset Management (Asia) Ltd. in Hong Kong.

Keppel, Singapore’s largest maker of oil rigs, lost 2.7 percent to S$14.40. SembCorp Marine, the No. 2, slid 3 percent to S$3.22. Companies supplying equipment and services to the oil and gas industry were among the worst performers in the island’s Straits Times Index in the past month as easing concerns over disruptions to energy supplies pushed crude prices lower.