Jan. 7 (Bloomberg) -- Asian stocks fell, erasing the week’s gains, after Samsung Electronics Co.’s profit decline fueled concern share gains are outpacing earnings growth. Default risk jumped to a one-month high and the euro touched the lowest in more than three months. The MSCI Asia Pacific Index lost 0.3 percent to 137.72 as of 1:30 p.m. in Tokyo. Standard & Poor’s 500 Index futures were little changed after the gauge yesterday slid from the highest in more than two years. The cost of protecting Asia-Pacific bonds with credit-default swaps rose the most since Nov. 23 and the euro sank to as low as $1.2968. Gold dropped for a fifth day. Samsung, the world’s largest maker of televisions and flat screens, said operating income fell 13 percent last quarter, while U.S. figures today may point to an improving labor market in the world’s largest economy. Bonds slid in Spain, Portugal and Belgium yesterday amid speculation indebted nations will struggle to fund deficits, and as the European Union proposed that regulators be allowed to write down lenders’ senior debt. “Asian equities are certainly not cheap anymore,” said Jamie Coutts, sales manager at the brokerage BGC Partners in Singapore. “What we need is stellar economic numbers from the U.S. to push stocks higher. That should help counter ongoing concerns about monetary tightening in China and Europe’s sovereign-debt problems.” Samsung’s Profit Losses today wiped out gains in the first week of 2011 for MSCI’s Asian index. The gauge, which closed on Jan. 4 at its highest level since June 2008, is valued at 16 times the reported profits of its companies. The S&P 500 fell 0.2 percent yesterday after a rally to the highest level since September 2008 boosted its valuations to the most-expensive since June. The index also has a multiple of almost 16 times, after having gained about 25 percent from its 2010 low in July amid improving economic data and Federal Reserve efforts to stimulate growth. Samsung, whose shares rose to a record on Jan. 3, slipped 0.7 percent after posting fourth-quarter operating profit of 3 trillion won ($2.7 billion). South Korea’s largest exporter had been forecast to post profit of 3.3 trillion won, according to analysts surveyed by Bloomberg. MediaTek Inc., Taiwan’s largest chip designer, tumbled 5.2 percent after saying December sales declined. Resona Holdings Inc., Japan’s fourth-largest bank, declined 4.4 percent, after a person familiar with the situation said the company will sell about 600 billion yen ($7.2 billion) of shares in a public offering this month to help repay government bailout funds. Bond Risk The Markit iTraxx Asia index of 50 investment-grade borrowers outside Japan surged six basis points to 108 basis points, according to Credit Agricole CIB. The index is headed for the highest since Dec. 6, when it was 110 basis points, and the biggest rise since it climbed 8.9 basis points on Nov. 23, CMA prices in New York show. Indexes for Australia and Japan also jumped. The euro slipped to $1.2995 from the $1.3003 close in New York, after earlier falling to $1.2968, the weakest since Sept. 15. The single currency was at unchanged at 108.35 yen. France will auction 8 billion euros ($10.4 billion) of 91-, 181-and 364-day bills on Jan. 10, Italy sells 7 billion euros of 367-day bills on Jan. 11 and Portugal offers 2014 and 2020 bonds on Jan. 12. Borrowing costs for Portugal surged at a six-month bill sale this week, the first of Europe’s high-deficit nations to test investor demand in 2011 after the threat of default forced Greece and Ireland to seek bailouts last year. Portugal, Spain “There’s an increased focus on the sovereign-debt profile of the likes of Portugal and Spain,” said Alex Sinton, senior currency dealer at ANZ National Bank Ltd. in Auckland. “The euro is headed for the $1.2950 area.” The EU proposed that bank regulators be granted powers to write down lenders’ senior debt and veto new products as part of a package of measures to protect taxpayers from future financial crises. “Banks will fail in the future and must be able to do so without bringing down the whole financial system,” Michel Barnier, the EU’s financial services commissioner, said in an e- mailed statement yesterday. The dollar traded at 83.54 yen from 83.33 yen yesterday, on course for a fifth day of gains. Economists are raising forecasts for the number of jobs added by U.S. employers in December after a report this week showed the biggest jump in company payrolls since records began in 2001. The median forecast in a Bloomberg News survey calls for a 150,000 gain last month, ahead of today’s data from the Labor Department. That’s up from 135,000 before a Jan. 5 report from ADP Employer Services. The dollar’s rally curbed demand for gold as a haven, sending the precious metal lower for a fifth-straight day. Bullion for immediate delivery lost as much as 0.3 percent to $1,367.53 an ounce before trading at $1,370.30. The price has tumbled 3.7 percent this week after advancing 30 percent in 2010. Cash silver dropped as much as 0.7 percent to $28.875 an ounce, while palladium and platinum also declined. --With assistance from David Yong in Kuala Lumpur, Frances Yoon, Sungwoo Park and Jungmin Hong in Seoul, Sarah McDonald in Sydney and Ron Harui in Singapore. Editor: Rocky Swift To contact the reporters on this story: Shiyin Chen in Singapore at schen37@bloomberg.net. Jonathan Burgos in Singapore at jburgos4@bloomberg.net To contact the editor responsible for this story: Rocky Swift at rswift5@bloomberg.net

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