Asian Stock Futures Drop After U.S. Service Industries Shrink

By Masaki Kondo and Patrick Rial


Feb. 6 (Bloomberg) -- Asian stock index futures dropped after U.S. service industries contracted at the fastest pace in six years and Fitch Ratings said it may downgrade the AAA insurance rating on MBIA Inc., the largest bond guarantor.

U.S.-traded receipts of Toyota Motor Corp. fell 2.6 percent from the closing share price in Tokyo yesterday after the company said it expects current-quarter earnings to fall as the yen strengthens and U.S. demand slows. Taiwan Semiconductor Manufacturing Co. slid 4.7 percent, while Mitsubishi UFJ Financial Group Inc. dropped 4.1 percent.

The Institute for Supply Management's U.S. non- manufacturing index fell in January below the 50 threshold of growth, sending the Standard and Poor's 500 Index to the biggest decline in almost a year. Fitch yesterday put MBIA's AAA rating under review for a downgrade after updating its assumptions for higher losses on subprime-related securities.

``Uncertainty remains,'' Hiroichi Nishi, an equities manager at Nikko Cordial Securities Inc., said in an interview with Bloomberg Television. ``In Japan, stocks related to high- tech companies will probably be pulled down today.''

Australia's S&P/ASX 200 Index fell 105.50, or 1.8 percent, to 5,687.40 as of 10:30 in Sydney. Nikkei 225 Stock Average futures expiring in March last traded at 13,330 in Chicago, down from the close of 13,750 in Osaka and 13,815 in Singapore yesterday.

The Nikkei lost 0.8 percent to 13,745.50 yesterday, while the broader Topix index retreated 0.7 percent to 1,355.48.

Lower Earnings Forecasts

Macquarie Group Ltd., Australia's biggest securities firm, dropped 6.6 percent to A$62.70, while Australia & New Zealand Banking Group Ltd. slipped 1.8 percent to A$25.92. Wesfarmers Ltd., Australia's biggest home improvement chain, lost 3.5 percent to A$36.59.

Toyota may fall after the world's biggest automaker by market value yesterday reported the smallest profit growth in a year and said earnings may fall in the quarter ending March 31 because of a stronger yen and worsening demand in the U.S.

Nikko Citigroup slashed its price estimate for the stock by 18 percent to 7,500 yen and retained its ``buy'' rating.

Hitachi Ltd., Japan's second-biggest maker of plasma televisions, may slip after the company cut its annual net- income forecast for this fiscal year by 75 percent because of a bigger-than-expected loss at its flat-panel television business.

Orix Corp., the nation's biggest non-bank financial company, may slide after slashing its annual net-income forecast by 16 percent for this fiscal year. Brokerages including Goldman, Sachs & Co. lowered their rating on the stock.

Japan Tobacco Inc. may be active after the company said it decided to cancel a plan to merge its frozen-food business with Katokichi Co. and Nissin Food Products Co. The nation's biggest cigarette maker recalled frozen pork products imported from China that were contaminated with pesticides.

Nikon Corp., the world's second-largest maker of single- lens reflex cameras, may be active after raising its annual profit projection by 5.7 percent on increased camera sales.