Asian Stocks Drop as China Factory Production Misses Estimates – Bloomberg

(Bloomberg) — Asian stocks fell after Chinese industrial output data showed the slowest start to a year since 2009 and amid speculation the Federal Reserve is moving closer to raising interest rates.

Fortescue Metals Group Ltd. and oil explorer Inpex Corp. dropped at least 2.3 percent each as materials and energy companies led declines. Noble Group Ltd. fell to a 17-month low, wiping out gains since the commodities trader rejected criticism of its accounting practices. Eisai Co. added 2.9 percent today in Tokyo as the drugmaker paced gains among medical stocks in Asia.

The MSCI Asia Pacific Index retreated 0.4 percent to 142.25 as of 4:08 p.m. in Hong Kong. Data showed China's industrial output and retail sales missed estimates in the January-February period, suggesting more stimulus may be needed to bolster slowing mainland growth. The Standard & Poor's 500 Index slipped 1.7 percent on Tuesday, the biggest drop in two months, as the dollar surged to near a 12-year high against the euro.

"This is not a time to stick your neck out and get too aggressive," Ted Weisberg, president of Seaport Securities Corp. in New York, told Bloomberg TV. "You have the strong dollar and the very real threat of the Fed raising interest rates sooner, rather than later. I don't think it's a time to panic, it's just a time to keep your powder dry."

The Shanghai Composite Index pared a 1.9 percent gain to close 0.2 percent higher. Chinese factory production rose 6.8 percent this year through February from a year earlier, compared with projections for 7.7 percent growth in a Bloomberg survey. Retail sales advanced 10.7 percent. Two-month data were used to avoid distortions from the Lunar New Year holidays.

Premier Li Keqiang last week set the nation's 2015 expansion target at about 7 percent. The central bank cut interest rates for the second time in three months from March 1, after earlier reducing banks' reserve requirements.

Fed Bank of Dallas President Richard Fisher said the U.S. central bank should begin to raise rates as the labor market improves. A report Friday showed the jobless rate fell to a seven-year low. While central bankers from Sydney to Frankfurt are loosening monetary policy, the Fed stands out in accepting a higher exchange rate as a sign of economic strength.

Japan's Topix index added 0.1 percent with volume about 17 percent below its daily average over the past 30 days. South Korea's Kospi index retreated 0.2 percent. New Zealand's NZX 50 Index declined 0.4 percent. Singapore's Straits Times Index dropped 0.8 percent, while India's S&P BSE Sensex Index added 0.1 percent. Australia's S&P/ASX 200 Index fell 0.5 percent.

To contact the reporter on this story: Adam Haigh in Sydney at ahaigh1@bloomberg.net

To contact the editors responsible for this story: Tom Redmond at tredmond3@bloomberg.net Jim Powell