Asian stocks swung between gains and losses as companies reported improved earnings, tempering concern that profits will fall after European leaders failed to provide specific plans to arrest a sovereign-debt crisis.
China Coal Energy Co. jumped 8.6 percent in Hong Kong and Dexus Property Group (DXS), an Australian property trust, advanced 3.8 percent in Sydney after both companies reported earnings increased. Sony Corp. (6758), Japan’s biggest exporter of consumer electronics, sank 2.7 percent in Tokyo as Europe’s economic growth trailed estimates. Honda Motor Co., a carmaker that gets more than 80 percent of its sales abroad, dropped 3.4 percent. LG Electronics Inc. (066570), which gets more than a quarter of its sales in North America, fell 4.2 percent in Seoul.
Nine stocks declined for every eight that advanced in the MSCI Asia-Pacific Index, which declined less than 0.1 percent to 124.80 as of 12:26 p.m. in Tokyo, following a two-day, 2.4 percent advance. The measure earlier rose 0.02 point, or less than 0.1 percent, after erasing a loss of up to 0.5 percent.
French President Nicolas Sarkozy and German Chancellor Angela Merkel rejected selling euro bonds and expanding a 440 billion-euro ($633 billion) rescue fund after talks between the two yesterday in Paris.
“It’s depressing,” said Masahiko Ejiri, a Tokyo-based fund manager at Mizuho Asset Management Co., which oversees $41 billion. “It’s like they’ve exhausted all their monetary and fiscal policy options in Europe, and the weakening in the U.S. economy is dangerous for Asian exporters.”
The MSCI Asia Pacific Index completed its third straight weekly loss last week after Standard & Poor’s cut its rating on U.S. government debt and concern grew that Europe’s debt crisis may spread. Ten-day historical volatility on the MSCI index, which is headed for its biggest monthly decline since October 2008, climbed last week to the highest level since March.
Credit Crisis
Japan’s Nikkei 225 Stock Average fell 1 percent today. The Hang Seng Index climbed 0.8 percent. South Korea’s Kospi Index gained 0.2 percent, while China’s Shanghai Composite Index swung between gains and losses.
Australia’s S&P/ASX 200 Index rose 1.3 percent as Woodside Petroleum Ltd., the nation’s No. 2 oil and gas producer reported profit that beat estimates. Hong Kong’s Hang Seng Index gained 1 percent.
Futures on the Standard & Poor’s 500 Index slid 0.4 percent. The index fell 1 percent in New York yesterday as the European leaders also proposed resubmitting a financial- transaction tax that was rejected in 2010.
MSCI’s Asian gauge pared gains late yesterday after a German government report showed economic growth almost stalled in the second quarter. Separately, gross domestic product in the 17-nation euro area expanded 0.2 percent in the second quarter from the previous three months, when the economy grew 0.8 percent, the European Union’s statistics office in Luxembourg said in a statement yesterday.
‘Big Cloud’
That’s the weakest growth since the euro region emerged from a recession in late 2009 and was less that the 0.3 percent median estimate of 34 economists in a Bloomberg News survey.
“Europe is that big cloud overhanging all the financial markets at the moment,” Steve Brice, chief investment strategist at Standard Chartered Bank in Singapore, said in a Bloomberg Television interview. “We see the negative news flow likely to come out of Europe rather than anywhere else in the world these days, so that’s what we’re all fearful about.”
U.S. housing starts fell 1.5 percent in July from June, the Commerce Department reported yesterday. Building permits, a proxy for future construction, also dropped.
The MSCI Asia Pacific Index lost 9.3 percent this year through yesterday, compared with drops of 5.2 percent by the S&P 500 and 14 percent by the Stoxx Europe 600 Index. Stocks in the Asian benchmark were valued at 12.5 times estimated earnings on average, compared with 12 times for the S&P 500 and 9.8 times for the Stoxx 600.
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