By Darren Boey and Anna Kitanaka Feb. 23 (Bloomberg) — Asian stocks fell following a rally that drove the MSCI Asia Pacific Index’s valuations to a three- week high yesterday. Copper fell on speculation increasing stockpiles may signal slowing global demand. The MSCI Asia Pacific Index sank 0.7 percent to 117.54 as of 12:05 p.m. in Tokyo, led by electronics and auto companies. Copper for three-month delivery dropped 1 percent to $7,255.50 a metric ton, down from $7,450 a ton on Feb. 19, the highest price since Jan. 26. Oil declined for the first time in six days, dropping below $80 a barrel. “There are a few speed humps on the recovery path,” said Jason Teh , who helps manage $3.2 billion at Investors Mutual in Sydney. “The market is expecting a recovery in earnings. Some companies have disappointed, and some have delivered.” The MSCI Asia Pacific Index climbed 2.6 percent yesterday as concerns the U.S. Federal Reserve will raise interest rates eased, taking the average price of the gauge’s companies to 1.55 times book value, the highest level since Feb. 3. Fed Chairman Ben S. Bernanke is due to deliver his semi-annual report on the economy and interest rates to House and Senate panels Feb. 24-25. Japan’s Nikkei 225 Stock Average declined 1.2 percent to 10,280.33. Australia’s S&P/ASX 200 Index lost 0.5 percent. South Korea’s Kospi Index slipped 0.5 percent. China’s Shanghai Composite Index dropped 1.6 percent. Futures on the U.S. Standard & Poor’s 500 Index fell 0.2 percent. The gauge declined 0.1 percent yesterday as lower metal prices dragged down commodity shares, overshadowing gains in banks on speculation the Fed will leave interest rates at a record low. U.S. Inflation New York Fed President William Dudley indicated on Feb. 19 that policy makers are more concerned about maintaining growth than fighting inflation, citing a smaller-than-forecast increase in the U.S. consumer-price index for January reported by the Labor Department the same day. Toyota Motor Corp. lost 1.1 percent to 3,305 yen. The company’s handling of recalls came under mounting criticism on the eve of the automaker’s U.S. congressional testimony, including charges that the lawmaker misled the public on the adequacy of its recalls. Aristocrat Leisure Ltd. tumbled 4 percent to A$4.28 in Sydney. The company posted a second-half loss A$124.5 million ($112 million) due to provisions for damages from a U.S. lawsuit. BHP Billiton Ltd. , the world’s largest mining company, slipped 1 percent to A$41.72. Newcrest Mining Ltd. , Australia’s biggest gold producer, dropped 1 percent to A$32.92. Mitsubishi Corp. , a trading house that gets about 40 percent of sales from commodities, declined 1.6 percent to 2,245 yen in Tokyo. Metal Stockpiles Copper futures for May delivery dropped 0.9 percent in New York after-hours trading. Gold futures fell 0.8 percent yesterday, while silver sank 1.2 percent, the biggest decline since Feb. 5. Stockpiles in warehouses monitored by the London Metal Exchange have climbed 10 percent this year after jumping 48 percent in 2009. Production outpaced demand by 144,000 tons in the first 11 months of last year, according to the International Copper Study Group. The LME’s index of six industrial metals fell 1 percent yesterday from its highest level since Jan. 20. Crude oil dropped as much as 0.6 percent to $79.86 a barrel in New York as analysts forecast that U.S. stockpiles probably rose 1.9 million barrels last week from 334.5 million, according to the median of seven estimates in a Bloomberg News survey. That would be the highest inventory level since November. Gasoline supplies probably also increased, analysts said. Bearish Signal “Given the fundamentals, they don’t justify crude prices above $80 a barrel,” said Ben Westmore , a minerals and energy economist at National Australia Bank Ltd. in Melbourne. “The trend in gasoline stocks has got to levels that are a lot higher in the U.S. than can be explained by a seasonal stock increase, and it probably is another bearish signal for the oil price.” The Treasury yield curve was near the steepest on record before a private report forecast to show U.S. consumer confidence fell, feeding speculation the Fed will refrain from raising interest rates. The difference between two- and 10-year yields was 2.90 percentage points, versus the high of 2.94 percentage points set Feb. 18. “People are more confident that a rate hike is not coming soon,” said Tomohisa Fujiki, an interest-rate strategist at BNP Paribas Securities Japan Ltd. in Tokyo. “Investors are buying short-term bonds. Supply concern is sending longer-term yields higher.” Consumer Sentiment Consumer sentiment dropped in February for the first time since October, according to a Bloomberg News survey of economists before the New York-based Conference Board reports the figure today. Home prices in the U.S. declined at the slowest pace since May 2007, a separate report may show. The government is scheduled to sell $44 billion of two-year debt today. It will also auction, $42 billion in five-year securities tomorrow and $32 billion of seven-year notes on Feb. 25. It sold $8 billion in 30-year Treasury Inflation Protected Securities yesterday. The euro traded near a nine-month low against the dollar as speculation that Greece’s fiscal woes will worsen damps demand for the 16-nation currency. Europe’s single currency traded at $1.3597 in Tokyo from $1.3596 in New York yesterday. It touched $1.3444 on Feb. 19, the lowest since May 18. The dollar fetched 91.09 yen from 91.14 yen. Japan’s currency was at 123.86 per euro from 123.92. “Details about any potential aid to Greece remain unclear, adding to uncertainty,” said Takeshi Tokita , vice president of foreign-exchange sales at Mizuho Corporate Bank Ltd. in Tokyo. “The euro will struggle.” The MSCI Asia Pacific Index has lost 7.3 percent from a 17-month high on Jan. 15 on speculation central banks will tighten monetary policy, and that Greece, Spain and Portugal will struggle to curb deficits. To contact the reporters for this story: Darren Boey in Hong Kong at dboey@bloomberg.net ; Anna Kitanaka in Hong Kong at akitanaka@bloomberg.net .
