Asian stocks book large losses

Asian stocks book heavy losses, falling the most since March and extending a global rout.  The region’s bonds gained, while commodities dropped for an eighth day amid concern the U.S. economic recovery is petering out.

The MSCI Asia Pacific Index tumbled 3.8% at noon in Tokyo, set for its largest weekly decline since October 2008. Standard & Poor’s 500 futures slid 0.1% following yesterday’s 4.8% slump. Japan’s 10-year bond yield sank to this year’s low and the yen reversed earlier losses, a day after intervention by Japan.

Just 12 of the MSCI Asia Pacific Index’s 1,018 members gained as the gauge extended its weekly loss to 8%. That will be the steepest one-week drop since October 2008, when credit markets froze following the bankruptcy of Lehman Brother Holdings Inc. a month earlier.

Japan’s Nikkei 225 Stock Average sank 3.5%, Hong Kong’s Hang Seng Index plunged 4.8% and Australia’s S&P/ASX 200 Index slumped 4.1%. Benchmark indexes for South Korea and Taiwan as well as the MSCI Asia Pacific Index also entered corrections today.

In currencies, the Australian dollar was little changed at US$1.0476 after the Reserve Bank raised the outlook for inflation to 3.5% from a previous prediction of 3.25%. The central bank also forecast growth in 2011 will average 2%, down from its May 6 estimate of 3.25%. The Dollar Index slipped 0.1%, retracing part of yesterday’s 1.7% rally. The U.S. currency traded at 78.58 yen from 78.89 yen yesterday.

In energy markets, Oil for September delivery fell 1.3% to US$85.55 a barrel on the New York Mercantile Exchange. In commodities, Futures are dropping for a sixth straight day and have erased this year’s gains. Wheat dropped 1.7% to $7.135/bu, while corn retreated 1.4% to $6.92/bu. Copper for three-month delivery declined 0.8% to US$9,285/t in London, while zinc fell 2.1% to US$2,281.50/t, set for an eight-day plunge.