By Patrick Rial and Akiko Ikeda Nov. 13 (Bloomberg) -- Asian stocks declined, led by BHP Billiton Ltd. and PetroChina Co., and bonds climbed as oil prices fell on concern the global economic recovery will falter. The MSCI Asia Pacific Index lost 0.2 percent to 117.65 as of 1:40 p.m. in Tokyo, paring a weekly advance to 1.1 percent. The yield on Japan’s 10-year government bond fell three basis points to 1.34 percent. Chinese yuan forwards climbed and dollar-denominated China shares surged ahead of President Barack Obama’s trip to Asia where his administration is pushing for more flexible exchange rates. Crude oil fell 0.2 percent, adding to a 3 percent tumble in New York yesterday as U.S. stockpiles rose more than economists had forecast. Prices had more than doubled from a five-year low reached in December as stimulus measures helped pull the global economy out of the worst slump since the Great Depression. “Lower commodity prices illustrate anxiety about the economy,” said Kiyoshi Ishigane, a strategist in Tokyo at Mitsubishi UFJ Asset Management Co., which oversees about $56 billion. Ten-year U.S. Treasury notes rose, pushing the yield down 2 basis points to 3.43 percent, after Obama said the U.S. “desperately” needs jobs. The dollar traded at $1.4864 per euro after gaining 0.9 percent to $1.4850 yesterday as investors sold higher-yielding assets. South Korean three-year yields declined five basis points to 4.295 percent. The won weakened 0.3 percent to 1,161.38 per dollar. Finance ministers from the 21-member Asia-Pacific Economic Cooperation group yesterday said in a statement that policy makers will remain vigilant until the recovery “gains traction.” Commodity Stocks BHP, Australia’s largest oil producer, lost 1.6 percent to A$38.93 in Sydney. PetroChina, the nation’s biggest oil producer, fell 1.8 percent to HK$9.90. Japan’s Nikkei 225 Stock Average dipped 0.4 percent to 9,768.57. Mitsui & Co., whose profit is the most sensitive among Japan’s five largest trading houses to changes in the price of oil, lost 1 percent to 1,185 yen. “There are still skeptical investors out there who don’t think the global recovery will be sustained and this is tempering the advance in equities,” said Allan Yu, who helps manage $4.24 billion at Manila-based Metropolitan Bank & Trust Co. “The market is trying not to run ahead of itself.” Oil declined after an Energy Department report showed crude inventories rose a more-than-expected 1.76 million barrels last week and U.S. refinery operating rates fell to the lowest in more than a year. Analysts surveyed by Bloomberg News forecast a 1 million-barrel gain. “There is a lot of uncertainty as to what we can expect with the rate of recovery in Western oil demand,” said Toby Hassall, a research analyst at CWA Global Markets Pty in Sydney. “There are sectors of the economy that remain weak.” Oil, Gold Fall Crude oil for December delivery fell as much as 1.2 percent to $76 a barrel in electronic trading on the New York Mercantile Exchange. It was recently at $76.80. Futures, up 73 percent since the start of the year, have dropped 0.8 percent this week. Gold futures for December delivery fell 0.2 percent to 1,104.80 per ounce, after touching an all-time high of $1,123.40 yesterday. Newcrest Mining Ltd., Australia’s largest gold producer, slumped 3.1 percent to A$34.48. The Dollar Index, which measures the greenback against a basket of six currencies, slipped 0.2 percent, ending a two-day, 0.9 percent advance. The U.S. currency dropped to the lowest since Aug. 8, 2008, during trading on Nov. 11, helping spur demand for gold as a store of value. Yuan Appreciation? Twelve-month non-deliverable forwards for the yuan rose 0.3 percent to 6.5895 per dollar in Shanghai, signaling traders are betting China will shift its currency peg of about 6.83 per dollar that’s been in place since July 2008. The Shanghai B- Share Stock Price Index, a gauge of dollar-denominated Chinese shares, jumped 6.1 percent on speculation corporate earnings in yuan will be bolstered by a stronger currency. APEC ministers yesterday called for “market-orientated exchange rates,” without naming the yuan. The People’s Bank of China this week said foreign-exchange policy will take into account global capital flows and changes in major currencies and scrapped language in a previous report to keep the yuan “basically stable.” The economy expanded by 8.9 percent in the third quarter from a year earlier. “There has been a subtle message sent that as China’s economy starts to recover, it’s probably appropriate for the PBOC to move back to a managed float,” Stephen Roach, chairman of Morgan Stanley Asia in Hong Kong, said in an interview. A shift may not be imminent and wouldn’t reach the 15 percent to 20 percent that some U.S. lawmakers have demanded, he said. China’s surging asset prices, a dollar “crisis” and oil prices above $100 a barrel are among the “tail risks” that investors face in 2010, Bank of America Corp.’s chief global equity strategist Michael Hartnett, wrote in a report. To contact the reporter for this story: Patrick Rial in Tokyo at prial@bloomberg.net; Akiko Ikeda in Tokyo at iakiko@bloomberg.net.

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