Asian Stocks Fall on Concern Greece May Default on Debt; Cochlear Tumbles - Bloomberg

Asian stocks fell, extending the benchmark index’s drop last week, amid speculation Greece may be nearing a default on its sovereign debt, bolstering concern about whether the crisis will spread to the banking system.

Commonwealth Bank of Australia, the nation’s largest lender by market value, retreated 3.4 percent. Mitsubishi UFJ Financial Group Inc., Japan’s largest listed lender by market value, declined 2.7 percent. Toyota Motor Corp., the world’s biggest carmaker, dropped 2.7 percent in Tokyo. BHP Billiton Ltd. (BHP), the world’s largest mining company, sank 2.6 percent in Sydney after oil and metal prices dropped. Cochlear Ltd. tumbled 18 percent after the company announced a product recall.

The MSCI Asia Pacific Index fell 1.3 percent to 119.19 at 9:52 a.m. in Tokyo, extending last week’s 2.7 percent drop. The gauge slumped 8.6 percent last month, the most since May 2010, amid concern global economic growth is slowing as Europe’s sovereign-debt crisis spreads and after Standard & Poor’s cut the U.S. credit rating.

In Europe, “things are probably going to get worse before they get better,” Erwin Sanft, head of China and Hong Kong research at BNP Paribas SA in Hong Kong, said in an interview on Bloomberg Television today. “Here in Asia, we’re looking at much more downside for markets. Much larger economies are being drawn into this crisis.”

Japan’s Nikkei 225 Stock Average dropped 2.1 percent. Australia’s S&P/ASX 200 Index sank 2.8 percent.

Futures on the Standard & Poor’s 500 Index lost 0.9 percent today. In New York, the index fell 2.7 percent on Sept. 9 after three German officials said Chancellor Angela Merkel’s government is preparing plans to shore up banks if Greece defaults. The European Central Bank said Juergen Stark resigned from the executive board, suggesting policy makers are divided over how to fight the debt crisis.

The MSCI Asia Pacific Index declined 12 percent this year through Sept. 9, compared with an 8.2 percent drop by the S&P 500 and a 19 percent loss by the Stoxx Europe 600 Index. Stocks in the Asian benchmark are valued at 12 times estimated earnings on average, compared with 11.6 for the S&P 500 and 9.3 times for the Stoxx 600.

To contact the reporters on this story: Anna Kitanaka in Tokyo at akitanaka@bloomberg.net; Susan Li in Hong Kong at sli31@bloomberg.net