By Darren Boey and Rocky Swift Nov. 24 (Bloomberg) -- Asian stocks fell, led by a fifth day of declines on the Nikkei 225 Stock Average, on concern Japanese banks will sell more shares to replenish capital. The dollar and the yen rose as investors pared bets on higher- yielding assets. The MSCI Asia Pacific Index lost 0.6 percent to 116.98 at 2:07 p.m. in Tokyo as the Nikkei sank 0.9 percent in its longest losing streak since July. Sumitomo Mitsui Financial Group Inc. and Mitsubishi UFJ Financial Group Inc. slumped at least 3 percent after Standard & Poor’s said they were among banks with the weakest capital. The dollar and yen rose against all the most-traded currencies tracked by Bloomberg. Investors retreated from riskier assets today as Japan’s Finance Minister Hirohisa Fujii said monetary policy is key to fighting deflation, signaling the central bank should do more to stem price declines. Stocks in MSCI’s Asian gauge are priced at 1.5 times the net worth of assets, near the highest levels since September 2008. A global rally yesterday drove the MSCI World Index up by the most in two weeks. “Markets have had a huge run on expectations of a recovery,” said Matt Riordan, who helps manage about $5.1 billion at Paradice Investment Management in Sydney. “We’re in a period now where signals that the recovery has been priced in are coming through. The market is discriminating a lot more.” Financial companies were the biggest drag on the MSCI Asia Pacific Index. Sumitomo Mitsui, Japan’s second-largest bank by market value, lost 4.4 percent to 2,690 yen after the Nikkei newspaper said the country’s banks are preparing a new round of share sales. Mitsubishi UFJ sank 3 percent to 457 yen. Seeking Haven Lloyds Banking Group Plc is expected to price its 13.5 billion-pound ($22.4 billion) rights offering at 36 pence a share today, keeping the discount at the narrowest level of the price range outlined in the prospectus this month, Financial Times reported today. Utilities advanced as some investors sought haven in stocks that pay higher dividends. Utilities in the MSCI Asia Pacific Index have a dividend yield of 2.7 percent, compared with 2.35 percent for the broader gauge. Kyushu Electric Power Co. gained 1 percent to 1,847 yen. Tokyo Electric Power Co. rose 1.6 percent to 2,250 yen. “Speculation about capital raising just keeps dragging on,” said Masaru Hamasaki, a strategist at Tokyo-based Toyota Asset Management Co., which oversees the equivalent of $14 billion. “Power utilities are being bought as defensive stocks.” U.S. Economy Futures on the Standard & Poor’s 500 Index lost 0.2 percent, following a 1.4 percent rally by the stock gauge yesterday. Speculation the Federal Reserve will keep borrowing costs near record low levels grew after Charles Evans, president of the Fed Bank of Chicago, told the Financial Times that U.S. interest rates may stay near zero until “late 2010, perhaps later.” “Interest rates are still very low, making equities a more attractive class than bonds,” said Khiem Do, who helps oversee about $10 billion in Asian equities at Baring Asset Management (Asia) Ltd. “Asian stocks may gain another 30 percent next year as earnings growth improves and economies in the region are recovering.” The U.S. government’s revised figures for third-quarter gross domestic product, due today, may show the world’s largest economy expanded at a 2.8 percent annual rate, compared with the 3.5 percent estimated last month, according to the survey. The revision will reflect a bigger trade gap and weaker retail sales in September, economists said. The GDP figures would still be the first expansion in more than a year. Home Prices The S&P/Case-Shiller home-price index declined 9.1 percent from September 2008 after an 11.32 percent year-over-year decrease a month earlier, according to the median forecast in a Bloomberg News survey. A separate report today may show consumer confidence slipped this month. The dollar climbed as high as $1.4938 to the euro, while the yen rose to 132.72 against the European currency. The Dollar Index, which IntercontinentalExchange Inc. uses to track the greenback against the currencies of six major U.S. trading partners, added 0.2 percent to 75.213. The gauge sank as much as 0.9 percent yesterday. “There’s no doubt that this deflation has been caused by weak demand,” Finance Minister Fujii said at a news conference in Tokyo today. Japan’s domestic demand deflator, a measure of price levels that excludes the cost of imports, fell 2.6 percent in the third quarter from a year earlier, the most since 1958, Cabinet Office figures showed on Nov. 16. Consumer Prices The eight-year breakeven rate, or the yield differential between conventional and inflation-protected Japanese government securities, fell two basis points to minus 1.14 percentage points today. That suggests traders expect consumer prices to decline to an average minus 1.14 percent over the next eight years. Inflation-adjusted securities typically yield less than regular bonds because their principal payment increases at the same rate as inflation. Deflation, a general drop in prices, enhances the value of the fixed payments from bonds. Asian currencies fell, led by the Philippine peso and Indonesia’s rupiah, on speculation central banks in the region will favor slower rates of appreciation to support exporters. The peso dropped 0.4 percent against the dollar, while the rupiah fell 0.3 percent. Malaysia’s ringgit lost 0.2 percent. The cost of protecting Asia-Pacific corporate and sovereign bonds from default declined as investors bet on improved creditworthiness in the region. The Markit iTraxx Asia index of 50 investment-grade borrowers outside Japan fell 2 basis points to 105.5 basis points in Singapore, Deutsche Bank AG prices show. iTraxx risk benchmarks in Japan and Australia also fell. Gold Prices Credit-default swaps pay the buyer face value if a borrower defaults in exchange for the underlying securities or cash equivalent. A basis point, or 0.01 percentage point, is equivalent to $1,000 a year on a contract protecting $10 million of debt. Gold for immediate delivery dropped 0.1 percent to $1,165.40 an ounce, trading below its $1,174 record reached yesterday. Gold is up 32 percent this year as the Dollar Index fell 7.5 percent. “With the kind of price rise we’ve seen in the past two weeks, there’s bound to be small corrections along the way, especially when the dollar shows signs of resilience,” said Steven Zhu, head trader at Shanghai Tonglian Futures Co. “I think investor appetite will be able to sustain the momentum at least till the end of the year.” Crude oil was little changed at $77.62 a barrel after failing to break through resistance at $80 a barrel and before a government report expected to show U.S. supplies rose last week as fuel demand weakened, according to a Bloomberg News survey. “In coming months, oil products are expected to be drawn down as the U.S. winter starts up,” said Ben Westmore, an energy and minerals economist at National Australia Bank Ltd. in Melbourne. “The market’s already factored in a draw-down in prices, and now we’re waiting to see if it happens.” To contact the reporter on this story: Darren Boey in Hong Kong at dboey@bloomberg.net; Rocky Swift at in Tokyo or rswift5@bloomberg.net.

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