Asian Stocks Fall on Renewed Subprime Concern; Banks Lead Drop

Asian stocks fell the most in more than two months, led by Mitsubishi UFJ Financial Group Inc., on concern Citigroup Inc. may be short of capital, renewing speculation losses from U.S. subprime loans will reduce profits.

Mitsubishi UFJ, Japan's largest bank, posted its biggest drop in almost three weeks. Toyota Motor Corp. and Hon Hai Precision Industry Co. led exporters lower after U.S. consumer spending rose less than forecast.

``We're seeing real potential for the world's largest economy to slow significantly and that affects everyone,'' said Angus Gluskie, who helps manage the about $500 million at White Funds Management in Sydney. ``Earnings across the board are not going to be very good, particularly for financials.''

Telecom Corp., New Zealand's No. 1 phone company, declined on its lower profit forecast. Korea Exchange Bank dropped after missing analysts' earnings estimates.

The Morgan Stanley Capital International Asia-Pacific Index lost 2.3 percent to 168.33 as of 3:42 p.m. in Tokyo, set for its biggest drop since Aug. 17. The benchmark has risen 0.2 percent this week. The Nikkei 225 Stock Average declined 2.1 percent to 16,517.48. All markets open for trading retreated, except Indonesia, Pakistan and Sri Lanka. The Philippine stock exchange is closed for a holiday.

The Standard & Poor's 500 Index and Dow Jones Industrial Average slumped 2.6 percent yesterday, erasing about $369 billion of market value. Financial shares led declines.

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