By Akiko Ikeda and Kyoung-wha Kim Dec. 9 (Bloomberg) -- Stocks from London to Tokyo dived after a Dubai developer posted a $3.65 billion loss and Japan’s economy grew less than expected. The euro slid to near a five- week low against the dollar as Greece’s debt rating was reduced. The MSCI Asia Pacific Index declined 0.7 percent to 120.02 as of 12 p.m. in Tokyo, led by the Nikkei 225 Stock Average’s 1.2 percent drop. The Standard & Poor’s 500 Index lost 1 percent to 1,091.94 in New York. Europe’s Dow Jones Stoxx 600 Index retreated 1.6 percent. The euro fell to as low as $1.4668 in Tokyo, the weakest level since Nov. 3, amid speculation credit ratings of more European nations will come under pressure after Greece’s debt ranking was lowered by Fitch Ratings. Nakheel PJSC, the Dubai World property developer, posted a first-half loss of 13.4 billion dirhams, according to a document obtained by Bloomberg News. Japan’s gross domestic product rose at an annual 1.3 percent pace, slower than the 4.8 percent reported in preliminary figures last month, the government said. “Investor sentiment is worsening because of the reignited uncertainty about credit,” said Naoteru Teraoka, who helps oversee $16 billion in Tokyo at Chuo Mitsui Asset Management Co. “There’s uncertainty about the future and companies are cautious.” Japan’s gross domestic product report underscored concern about the sustainability of a recovery that is under threat from deflation and a rising yen. Prime Minister Yukio Hatoyama unveiled a 7.2 trillion yen ($81 billion) stimulus package yesterday, the first for his Cabinet, to prop up the recovery. Exporters Fall Japan exporters declined as the stronger yen threatened to reduce the value of overseas revenue when converted into their home currency. Nissan Motor Co., an automaker that gets 35 percent of its revenue from North America, slumped 3.5 percent to 710 yen. Honda Motor Co. lost 1.5 percent to 2,995 yen. The yen appreciated to as strong as 88.30 against the dollar in Tokyo, compared with 88.43 in New York yesterday. “Concerns remain about currencies as well as overseas credit risks,” said Hiroichi Nishi, an equities manager at Nikko Cordial Securities Inc. in Tokyo. Australia’s S&P/ASX 200 Index lost 1.2 percent as a report showed consumer confidence fell in December. New Zealand’s NZX 50 Index slipped 0.5 percent, even as Finance Minister Bill English said the nation’s economic outlook was improving. Credit Risks Debt restructuring by Dubai state-run companies may almost double to $46.7 billion as more of the emirate’s businesses need help making payments, Morgan Stanley said. Dubai World, a government holding company that owns 80 percent of DP World Ltd., said last week it’s in talks with banks to reorganize debt after requesting a creditor “standstill” on Nov. 25. Nakheel PJSC’s $3.52 billion of Islamic bonds due Dec. 14 dropped more than 10 percent yesterday to 46.5 cents on the dollar, according to Citigroup Inc. Bonds sold by DIFC Investments and Dubai Holdings Commercial sank as low as 44.5 cents on the dollar after Moody’s Investors Service cut the credit ratings of six state-run companies. A jump in the cost of DP World’s credit-default swaps implied a 33 percent risk that the port operator will renege on debt. Fitch yesterday downgraded Greece’s credit rating one step to BBB+, the third-lowest on its investment-grade scale, and said the outlook for the rating is negative. Standard & Poor’s yesterday put the country’s rating on watch for a possible downgrade. ‘Resilient’ Sovereigns Moody’s Investors Service said yesterday the U.K. and the U.S. have “resilient” Aaa ratings, as opposed to the “resistant” top ratings of Canada, Germany and France. Moody’s also said that its top debt ratings on the U.S. and the U.K. may “test the Aaa boundaries.” “There was a whole host of negative issues that gave people an excuse to cut back on risky positions,” said Chris Weston an institutional dealer at IG Markets in Melbourne. “People seem quite happy to sit on the sidelines until the new year.” The MSCI Asia Pacific Index has rallied 70 percent from a five-year low on March 9 on signs stimulus measures were reviving global growth. The gauge’s advance outpaced gains of 61 percent by the S&P 500 and 54 percent for Europe’s Dow Jones Stoxx 600. Stocks in MSCI’s Asia benchmark are valued at 22 times estimated earnings, compared with 17 times for the S&P and 15 times for the Stoxx. Gold advanced for the first time in five days on speculation the slide to the lowest price in three weeks is attracting investors. Bullion slumped 2.6 percent yesterday as the dollar strengthened and after Lee Eung Baek, head of reserve management at the Bank of Korea, described gold as an “illusion” and said the bank is unlikely to increase its holdings. Newcrest Mining Ltd., Australia’s largest gold producer, slipped 2.6 percent. ‘Buying on Weakness’ “There’s some buying on weakness in gold and oil so far,” said Ben Westmore, a commodities analyst with National Australia Bank in Sydney. “We’ve seen quite thin trading in commodities markets. Some investors are still optimistic about the global recovery and willing to buy on weakness.” Gold for immediate delivery strengthened as much as 0.8 percent to $1,136.90 an ounce in Singapore. The price dropped to as low as $1,124.60 an ounce yesterday, the lowest level since Nov. 16. Copper declined for a fifth day, dropping as much as 1 percent to $6,910 a metric ton, the longest losing streak since July, as the Japanese economy expanded less initially estimated in the third quarter. Aluminum fell 1.3 percent to $2,135 a ton and zinc shed 0.8 percent to $2,309 a ton. Crude oil climbed above $73 a barrel in New York, rising for the first time in six days, after an industry report showed U.S. supplies dropped, bolstering optimism that fuel demand in the biggest energy-consuming nation will increase. Oil futures fell to an eight-week low yesterday as the dollar gained against the euro. Crude oil for January delivery gained as much as 72 cents, or 1 percent, to $73.34 a barrel in electronic trading on the New York Mercantile Exchange. Prices have climbed 64 percent this year. To contact the reporters on this story: Akiko Ikeda in Tokyo at iakiko@bloomberg.net; Kyoung-wha Kim in Seoul at kkim19@bloomberg.net.

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