Asian stocks fell for the first time in four days and South Korea’s won weakened, paring gains before the holiday weekend and as higher raw material prices stoked inflation concerns. The MSCI Asia Pacific Index sank 0.3 percent to 135.07 at 4 p.m. in Tokyo, paring its gains for the week to 1.1 percent amid holiday-shortened trading hours in most regional markets. Euro Stoxx 50 index futures rose 0.1 percent. The won weakened as much as 0.5 percent to 1,154.90 per dollar. The yen retreated against 15 of its 16 major peers. Oil added 0.4 percent to $94.61 a barrel in London, its highest level since Oct. 3, 2008. The MSCI Asian index yesterday reached its most expensive level in almost three months after a 12 percent rally this year that was driven by signs the global economic recovery is gaining strength. Data showing improving household purchases, durable goods orders and consumer confidence in the U.S. drove crude prices to a fifth day of gains while rubber traded at a record high, fueling speculation that accelerating inflation from China to India will force policy makers to raise borrowing costs. “The U.S. recovery seems on track, although the job market still needs improving, but high prices in China are likely to continue for a while, which inevitably comes along with such strong pace of growth,” said Park Jae Wu, a fund manager in Seoul at Shinhan BNP Paribas Asset Management Co., which oversees $28 billion of assets. About five stocks dropped for every two that gained on the MSCI index for Asia. The gauge’s valuation yesterday climbed to 16 times reported profits, the highest since Sept. 29. U.S. stocks yesterday fell after a five-rally sent the Standard & Poor’s 500 Index to the most expensive level since June. Automakers, Advantest Brilliance China Automotive Holdings Ltd. and Dongfeng Motor Group Co. slumped at least 7.5 percent each, leading automakers lower after the city of Beijing decided to limit the number of new passenger vehicles. Advantest Corp., the world’s largest maker of chip-making equipment, dropped 1.8 percent after Nasdaq-listed Verigy Ltd. said the Japanese company raised its takeover offer. In South Korea, Hyundai Merchant Marine Co. fell 5.7 percent after selling new shares at a discount to an affiliate, while SK Energy Co., the nation’s biggest oil refiner, advanced 3.2 percent after agreeing to sell assets in Brazil for $2.4 billion. The yen declined 0.3 percent to 62.11 per New Zealand dollar and slid 0.2 percent to 13.91 per Norwegian Krone. Against the euro, the Japanese currency fell to 108.93 from 108.74 in New York yesterday before reports due on Dec. 29 that are forecast to show European inflation accelerated last month and consumer prices in Germany rose. Confidence, Home Prices U.S. data next week may show that the Conference Board’s sentiment index for U.S. consumers rose to 56.3 even as the S&P/Case-Shiller index of home values in 20 cities fell 0.2 percent in October from the same month in 2009, according to estimates from economists surveyed by Bloomberg. The Commerce Department yesterday said household purchases rose 0.4 percent while bookings for capital goods including computers and electronics gained 2.6 percent. “The economic data has been looking pretty reasonable and there’s nothing data-wise or news-wise that’s particularly negative,” said Matt Riordan, who helps manage about $7 billion in Sydney at Paradice Investment Management Pty. “There’s probably a bit of profit-taking going on at the end of the calendar year.” The yield on Japan’s benchmark 10-year government note rose as much as 1.5 basis points to 1.15 percent in Tokyo at Japan Bond Trading Co., the nation’s largest interdealer debt broker. Trading in Treasuries was halted due to the Christmas holiday. Oil Rallies Brent crude oil for February, the benchmark European contract, was poised for its longest rising streak in six weeks, while New York futures, which are shut today, jumped 1.1 percent yesterday to end at $91.51, the highest close since Oct. 3, 2008. Rubber climbed to a record on the Tokyo Commodity Exchange, with the June-delivery contract gaining as much as 1.2 percent to 418.5 yen a kilogram ($5,038 a metric ton). Copper in London traded today at $9,295 a ton, within $100 of an all-time high. Rallies in soybeans, wheat, corn and edible oils have helped to propel the Food & Agriculture Organization’s Food Price Index of 55 farm-commodity prices to the highest level since July 2008. The Thomson Reuters/Jefferies CRB Index has climbed 16 percent this year to the highest level since October 2008. Rising Costs India’s food inflation accelerated to a six-week high, driven by a jump in onion prices, data from the trade ministry yesterday showed. The Reserve Bank of India has raised its benchmark interest rates six times in 2010, while China’s central bank has increased borrowing costs once and boosted banks’ reserve requirements six times this year. China’s finance ministry failed to draw enough demand at a bill sale for the second time in a month, reflecting a cash squeeze sparked by increases in banks’ reserve-requirement ratios and seasonal demand for funds. The ministry sold 16.76 billion yuan ($2.53 billion) of 91-day securities, falling short of the planned 20 billion yuan target, according to traders at the lead underwriters of government debt, who asked not to be identified. The premium to buy yuan outside China disappeared after Hong Kong’s central bank said it will set up a fund to ensure supply of the currency for cross-border trade settlements. Yuan traded in Hong Kong at 6.6515 per dollar, almost matching the 6.6329 rate in Shanghai, data compiled by Bloomberg show. The premium reached 2.6 percent on Oct. 19, reflecting a shortage of the currency since offshore trading began in July. Hong Kong banks will be allowed to tap the 20 billion yuan ($3 billion) fund from next month should the city’s yuan clearing bank run out of funds set under a quarterly quota. To contact the reporter on this story: Shiyin Chen in Singapore at schen37@bloomberg.net; Saeromi Shin in Seoul at sshin15@bloomberg.net. To contact the editor responsible for this story: Clyde Russell at crussell7@bloomberg.net

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