Dec. 15 (Bloomberg) -- The euro fell the most in a week and Asian stocks declined after Moody’s Investors Service said it may cut Spain’s credit rating. Treasuries rose, pushing 10-year yields down from their highest level since May. The shared currency dropped 0.5 percent to $1.3305 as of 4:15 p.m. in Tokyo, and weakened 0.3 percent to 111.56 yen. The MSCI Asia Pacific Index sank 0.8 percent to 134.09, retreating from its highest level in more than two years. Futures on the Euro Stoxx 50 index dropped 0.5 percent, those on the Standard & Poor’s 500 Index slid 0.3 percent, while the yield on the benchmark Treasury note due 2020 fell six basis points to 3.41 percent. Crude oil retreated for a second day. Moody’s placed Spain’s Aa1 debt rating on review for a possible downgrade, fueling concern that Europe’s debt crisis will spread from Greece and Ireland even after the two nations received bailouts. The Federal Reserve said yesterday it won’t slow record stimulus amid a “disappointingly slow” recovery, while the Bank of Japan’s Tankan index showed sentiment at large manufacturers fell for the first time since March 2009. “The euro is sliding in response to the headline, as the market looks for a target,” said Tomohiro Nishida, a Tokyo-based foreign-currency dealer at Chuo Mitsui Trust & Banking Co., a unit of Japan’s seventh-largest banking group. “If Spain falls into the same kind of predicament as Greece, the impact will be significant because its economy is bigger.” The euro fell against 11 of its 16 most actively traded counterparts after Moody’s cited Spain’s “vulnerability to funding stress’” and said the nation will need to raise about 170 billion euros ($226 billion) in 2011. EU Summit European Union leaders start a two-day summit at 5 p.m. in Brussels tomorrow with the focus on the permanent crisis- fighting system to be started in 2013. German Chancellor Angela Merkel has ruled out an increase in the euro area’s 750 billion- euro emergency fund. “More will need to be done,” Mitul Kotecha, head of global foreign-exchange strategy at Credit Agricole in Hong Kong, said in a Bloomberg Television interview. “Perhaps that will involve the European Central Bank’s ability to buy European debt, or further increases in support to peripheral countries, or even bigger countries such as Spain and Italy.” The dollar strengthened against 15 of 16 major counterparts before data forecast to show production at factories, mines and utilities rose in November for the first time in three months. Yields on 10-year Treasuries declined, having jumped 20 basis points yesterday after the Fed maintained its plan to expand record monetary stimulus and leave interest rates low for an “extended period.” Nippon Steel, JFE Almost three stocks declined for every two that gained on the MSCI Asian index, which has climbed 11 percent this year. Japan’s Nikkei 225 Stock Average fell 0.1 percent from a seven- month high after the Tankan report, with Nippon Steel Corp., Japan’s largest maker of the alloy, falling 1.3 percent and JFE Holdings Inc., the second-biggest, dropping 1.2 percent. Hong Kong’s Hang Seng Index fell 2 percent, its biggest decline this month. Evergrande Real Estate Group Ltd. dropped 3.8 percent, pacing losses among Chinese developers, after the China Daily said the city of Beijing may introduce extra measures to curb home price gains. Crude oil slipped for a second day, losing 0.8 percent to $87.62 a barrel in New York after an industry report showed U.S. heating oil stockpiles rose for a third week. Copper fell 0.6 percent to $9,113 a metric ton on the London Metal Exchange, declining for a second day. The metal earlier rose as much as 0.9 percent after peaking at $9,267.50 a ton yesterday. Zinc dropped 1 percent while nickel slipped 0.8 percent. --With assistance from Linzie Janis in London, Kana Nishizawa and Rocky Swift in Tokyo, Candice Zachariahs in Mumbai, Glenys Sim in Singapore and David Yong in Kuala Lumpur. Editors: James Regan, Linus Chua To contact the reporter on this story: Shiyin Chen in Singapore at schen37@bloomberg.net; Yoshiaki Nohara in Tokyo at ynohara1@bloomberg.net. To contact the editor responsible for this story: James Regan at jregan19@bloomberg.net

Source