Asian Stocks Retreat on Iodine in Tokyo Tap Water, Reactor Woes

Asian stocks fell, with the regional benchmark index set for its first loss in four days, after levels of iodine unsafe for infants were reported in Tokyo tap water as workers struggled to reconnect power to a damaged nuclear reactor.

Tokyo Electric Power Co. slumped 4.5 percent after rising as much as 7 percent before a Tokyo official warned against giving infants tap water to drink. Toyota Motor Corp., the world’s biggest carmaker, declined 1.2 percent after extending production halts. Virgin Blue Holdings Ltd. plunged 6.1 percent in Sydney after Australia’s second-largest airline forecast an annual loss. China Coal Energy Co. slumped 9.1 percent in Hong Kong after earnings missed estimates.

“Investor focus has moved to the medium-term consequences of the natural disaster to the Japanese and global economies,” said Tim Schroeders, a money manager in Melbourne at Sydney- based Pengana Capital Ltd., which manages about $1 billion.

The MSCI Asia Pacific Index fell 0.2 percent to 132.78 as of 7:32 p.m. in Tokyo. About the same number of stocks advanced as declined on the index. The gauge last week recorded its biggest weekly drop since the height of the European debt crisis in May, as Japan fought to prevent a nuclear disaster after the March 11 earthquake and tsunami, and as tensions escalated in Libya.

“There are still a lot of uncertainties surrounding the nuclear fallout, as well as aftershocks, and we won’t be seeing a stable market for a while,” said Yoshinori Nagano, a senior strategist in Tokyo at Daiwa Asset Management Co., which oversees about $104 billion. “No one thinks the nuclear crisis has ended completely.”

Iodine Levels

Japan’s Nikkei 225 Stock Average fell for the first time in three days, losing 1.7 percent, having surged 7.2 percent in the previous two days. Hong Kong’s Hang Seng Index declined 0.1 percent. South Korea’s Kospi Index slipped 0.1 percent, while Australia’s S&P/ASX 200 Index rose 0.2 percent.

People in the Tokyo area should avoid giving tap water to infants, a city official said in a televised conference. The advice came after levels of iodine were found to exceed the limits for infants at a water treatment facility in the Japan capital, the official said. Tokyo-listed drinks makers including Kirin Holdings Co. and Asahi Breweries Ltd. surged on the report.

Engineers at Japan’s stricken nuclear plant are unable to connect power to one of four damaged reactors, marring progress to cool the fuel rods. Restoring power is key to ending the crisis at reactors that have leaked radiation into the ocean and air and forced the government to evacuate thousands of local residents.

Battling Meltdown

Fukushima Dai-Ichi Plant operator Tokyo Electric Power Co. has been battling to prevent a meltdown after losing electricity that helps circulate cooling water to the units following the temblor and tsunami. The company’s shares fell 4.5 percent to 1,049.

A series of earthquakes struck Japan’s Fukushima prefecture today, starting with a magnitude 6.0 temblor at 7:12 a.m. local time, according to Japan’s Meteorological Agency. The Japan Nuclear and Industrial Safety Agency said there has been no impact on the Fukushima plant from the latest temblors.

“Anxieties about the nuclear issues aren’t gone yet, but the situation is improving,” said Hiroichi Nishi, an equities manager in Tokyo at Nikko Cordial Securities Inc. “Some industries and stocks that declined significantly lately will be bought back.”

Europe, Libya

Futures on the Standard & Poor’s 500 Index climbed 0.3 percent today. The index retreated 0.4 percent yesterday as the price of oil rose amid unrest in Libya and concern grew that Europe won’t find an immediate solution to its debt crisis.

The MSCI Asia Pacific Index lost 3.4 percent this year through yesterday, compared with a gain of 2.9 percent by the S&P 500 and a drop of 1.5 percent by the Stoxx Europe 600 Index. Stocks in the Asian benchmark are valued at 13.3 times estimated earnings on average, compared with 13.4 times for the S&P 500 and 10.9 times for the Stoxx 600.

Honda Motor Co. dropped 1.8 percent to 3,090 yen in Tokyo today. Japan’s second-largest carmaker by market value will suspend production at three plants in Saitama, Mie and Kumamoto prefectures until at least March 27. Daihatsu Motor Co. Japan’s biggest minicar maker, lost 1.5 percent to 1,214 yen after extending a production halt until March 24. Toyota slipped 1.2 percent to 3,305 yen.

The Nikkei 225 plunged 10 percent last week on concern the effects of the earthquake and damaged reactors will hurt a recovery in the world’s third-largest economy.

Virgin, China Coal

In Sydney, Virgin Blue plunged 6.1 percent to 31 Australian cents after the airline forecast an annual loss on higher fuel prices and the effects on tourism of from last month’s Cyclone Yasi, which devastated parts of Queensland state, and the New Zealand earthquake, which destroyed much of Christchurch.

China Coal, the nation’s second-largest producer of the fuel, dropped 9.1 percent to HK$10.74 in Hong Kong. Net income increased 1 percent to 7.47 billion yuan ($1.1 billion), China Coal said yesterday, missing a mean estimate of 10.03 billion yuan in a Bloomberg survey of 17 analysts.

Maanshan Iron & Steel Co., China’s second-biggest Hong Kong-traded steelmaker, slipped 2.4 percent to HK$4.15 after reporting that second-half earnings slumped 95 percent.

Among stocks that rose today, Taiheiyo Cement Corp., Japan’s biggest cement maker, surged 3.4 percent to 153 yen in Tokyo and Sumitomo Osaka Cement Co. gained 0.8 percent to 252 yen, as building-materials suppliers rose on speculation they’ll benefit from post-earthquake reconstruction.

Reconstruction Agency

Japan said it may set up a reconstruction agency to oversee earthquake repairs, while data showed the central bank pumped record liquidity into lenders as the nation grappled with its worst disaster since World War II.

Chief Cabinet Secretary Yukio Edano told reporters in Tokyo the government will weigh “some sort of system or organization” to oversee spending following the earthquake, adding that it’s too early to say when a spending bill will be compiled. The Bank of Japan said yesterday lenders’ deposits with the central bank more than doubled since March 11 to 41.62 trillion yen ($513 billion).