Asian Stocks Fall to Two-Week Low on Bond Yields; Samsung Drops

June 13 (Bloomberg) -- Asian stocks fell to a two-week low on concern interest rates will rise and sap growth in the world's largest economies.

Samsung Electronics Co. and Taiwan Semiconductor Manufacturing Co. led declines among exporters after yields on U.S. bonds climbed to the highest in five years. BHP Billiton Ltd. led mining shares lower after metals prices dropped.

``A short-term correction looks inevitable for global markets,'' said Chang In Whan, president of KTB Asset Management Co. in Seoul, which has $3.8 billion in equity assets. Global inflationary pressure will ``squeeze liquidity,'' he said.

The Morgan Stanley Capital International Asia-Pacific Index slid 0.9 percent to 149.38 as of 8:02 p.m. in Tokyo, set for the lowest close since May 30. Japan's Nikkei 225 Stock Average dropped 0.2 percent, while the Topix index lost 0.3 percent.

Canon Inc. advanced after the yen weakened against the dollar and euro. China Merchants Bank Co. paced gains in China, where the CSI 300 Index approached a record high. Markets in Sri Lanka and Pakistan had the only other benchmarks that rose.

U.S. stocks fell as 10-year bond yields rose, reaching 5.31 percent after former Federal Reserve Chairman Alan Greenspan predicted borrowing costs will advance in the U.S. and emerging economies. Yields gained in Asian markets including Japan, Australia, Thailand and the Philippines.

Samsung, South Korea's largest exporter, slid 0.9 percent to 573,000 won. The company accounted for about 16 percent of South Korean exports last year. Taiwan Semiconductor, the world's biggest supplier of made-to-order chips, fell 1.1 percent to NT$64.10. It makes about three-quarters of its sales in the U.S.

Consumption Concern

``Everybody has started to think interest rates will continue to rise,'' said Hideo Arimura, who helps look after $16 billion at Dai-Ichi Kangyo Asset Management Co. in Tokyo. ``Some people are also worried about the possibility that U.S. consumption will be curbed.''

Australia & New Zealand Banking Group Ltd., Australia's third-largest bank, fell 1.2 percent to A$28.67. PTT Pcl, Thailand's biggest energy company, slid 3.9 percent to 248 baht. SM Prime Holdings Inc., the Philippines' No. 1 shopping-mall operator, declined 3.8 percent to 2.75 pesos.

HSBC Holdings Plc, a London-based lender that controls two of Hong Kong's biggest banks, dropped 0.3 percent to HK$143. Movements in Hong Kong's interest rates typically track the U.S. because the local currency is linked to the U.S. dollar.

``Most sectors are taking a hit, and you certainly wouldn't want to be holding on to lots of banks, interest-rate sensitive stocks, or anything that is highly leveraged to the economic cycle,'' said Troy Angus, who helps manage the equivalent of $2.1 billion at Paradice Investment Management Ltd. in Sydney.

Metals Prices Drop

BHP Billiton, the world's largest mining company, slid 1.7 percent to A$32.79. Sumitomo Metal Mining Co., Japan's No. 2 copper smelter and biggest nickel producer, plunged 4.2 percent to 2,620 yen.

A measure of six metals traded on the London Metal Exchange dropped 2.4 percent yesterday. Copper slipped 2.5 percent, zinc fell 1.1 percent and nickel slumped 5.8 percent.

Japanese exporters gained. Canon, the world's biggest digital-camera maker, added 0.6 percent to 7,190 yen. Sony Corp., the No. 1 maker of game consoles, rose 1.2 percent to 6,660 yen. Honda Motor Co., Japan's No. 2 automaker by sales, gained 0.5 percent to 4,240 yen.

The yen dropped to 122.28 against the dollar from 121.69 late in New York yesterday. It reached 122.30 earlier, the lowest since December 2002. The yen fell to 162.45 per euro from a one-month high of 161.51.

A weaker yen increases value of exports sold in dollars when converted to the local currency.

Continued Benefit

``There's no chance of the yen starting on a sudden strengthening trend,'' said Akihide Kinugawa, who helps look after the equivalent of $19 billion in Japanese stocks at T&D Asset Management Co. in Tokyo. ``Carmakers and other exporters are going to continue to benefit from the yen's weakness.''

China's CSI 300 Index rose 2 percent to 4118.27, its seventh day of gains, approaching a record close of 4168.29 set May 29. Investors set up 242,125 securities accounts for investing in mainland shares and mutual funds on June 11, bringing the tally to 103.6 million, according to the latest future from the China Securities Depository & Clearing Corp. More than a million accounts were opened last week.

China Merchants, the nation's seventh-largest lender, gained 4.7 percent to 22.64 yuan. China Vanke Co., the biggest listed property developer, rose 5.5 percent to 19.55 yuan.

``High liquidity and huge earnings potential for Chinese companies are key factors driving the market up,'' said James Liu, who helps manage the equivalent of $2.3 billion with APS Asset Management Ltd. in Shanghai.

Meanwhile, Daido Steel Co. posted the biggest percentage advance on the MSCI Asian Index after the Nikkei newspaper reported prices for some automotive steel will gain by about 12 percent. Japan's largest specialty steelmaker jumped 11 percent to 863 yen.