Asian stocks (MXAP) fell, the dollar rose and the won headed for the biggest drop in two months after North Korean leader Kim Jong Il died and as European finance ministers prepare to discuss the region’s debt crisis.
The MSCI Asia Pacific Index slid 2 percent at 1:29 p.m. in Tokyo, South Korea’s Kospi index slumped 3 percent, and the Shanghai Composite Index dropped 2.6 percent after data showed Chinese home prices declined last month. Standard & Poor’s 500 Index futures lost 0.5 percent. The dollar climbed 0.4 percent to $1.2993 against the 17-nation euro and rallied 1.6 percent against the South Korean won. Oil declined for a fourth day in New York and copper snapped a two-day gain.
Kim, 70, died on Dec. 17 of exhaustion brought on by a sudden illness, the official Korean Central News Agency said. Euro-area finance ministers are seeking to meet a self-imposed deadline for drawing additional aid to the debt crisis through the International Monetary Fund and put together new budget rules. France is set to sell as much as 7 billion euros ($9.1 billion) of bills after Fitch Ratings last week reduced its outlook for the nation’s credit grade to negative from stable.
“What investors don’t like most is uncertainty,” said Im Jeong Jae, a Seoul-based fund manager at Shinhan BNP Paribas Asset Management Co., which oversees about $28 billion. “Amid very limited information over his death, it’s very tricky to guess what will happen in the communist nation as well as the impact on regional security.”
About eight shares declined for every one that gained on MSCI’s Asia Pacific Index, which dropped 4.4 percent in the past two weeks. Australia’s S&P/ASX 200 Index sank 2.3 percent, Japan’s Nikkei 225 Stock Average retreated 1.1 percent and Hong Kong’s Hang Seng Index slipped 2.5 percent.
Billabong International Ltd. (BBG) tumbled 44 percent after the Australian surfwear maker said first-half profit may fall as much as 26 percent. Agile Property Holdings Ltd. (3383) dropped 4.9 percent in Hong Kong, pacing losses among developers after China’s new home prices dropped in November from the previous month in 49 of 70 cities.
Speco Co. (013810), a South Korean defense equipment maker, rallied 15 percent in Seoul. The won weakened to 1,176.88 per dollar, set for its largest daily decline since Oct. 3. A government statement called on North Koreans to “loyally follow” his son, Kim Jong Un.
The euro weakened before regional finance ministers hold a conference call at 3:30 p.m. Brussels time to discuss 200 billion euros of additional funding through the IMF. France is selling bills today after Fitch said on Dec. 16 that the country is more exposed to the region’s debt crisis than other top-rated euro-zone countries because of its budget deficit and government debt burden. Spain will auction government securities tomorrow maturing in three and six months.
“There’s not going to be any upside until this situation is fixed,” Nick Maroutsos, who oversees the equivalent of about $3 billion as co-founder of Sydney-based Kapstream Capital, said in a Bloomberg Television interview. “Given that France might get downgraded, or we could see further sovereign defaults in the coming months, ultimately it’s going to put more pressure on the banks in the European region and also more pressure on the global environment.”
The Australian dollar dropped 0.8 percent to 99.08 U.S. cents. The Reserve Bank of Australia releases minutes tomorrow of its Dec. 6 meeting when it cut interest rates for a second- straight month.
Crude for January delivery lost 0.8 percent to $92.77 a barrel on the New York Mercantile Exchange, extending a three- day, 6.6 percent decline. Three-month copper dropped 1.9 percent to $7,208.50 a metric ton in London and nickel slipped 2.3 percent to $18,130 a ton. Gold slid 0.7 percent to $1,587 an ounce, extending last week’s 6.6 percent slump.
The cost of insuring corporate bonds in Australia and Japan against non-payment increased, according to credit-default swap traders. The Markit iTraxx Australia index rose two basis points to 195 basis points, according to Westpac Banking Corp, while the Markit iTraxx Japan index climbed 2.5 basis points to 192, Deutsche Bank AG prices show.
S&P 500 futures expiring in March signal the U.S. stocks gauge may snap gains from Dec. 16, when it advanced 0.3 percent. Treasury 10-year yields slid one basis point to 1.84 percent.
U.S. online spending for the holiday season has jumped 15 percent to $30.9 billion from the year-earlier period, ComScore Inc. said. Consumer purchases probably rose 0.3 percent in November after increasing 0.1 percent in October, according to the median forecast of 62 economists surveyed by Bloomberg before Commerce Department figures Dec. 23.