(Bloomberg, Oct 25, 2006) Asian stocks fell, led by Japanese consumer lenders including as Aiful Corp., after reports said the ruling Liberal Democratic Party dropped a plan to allow consumer lender to apply higher interest rates on some consumer loans.

``The environment surrounding consumer finance companies is severe and their earnings will likely stay weak for a while,'' said Atsushi Osa, who helps oversee $4.1 billion at Sumitomo Mitsui Asset Management Co. in Tokyo.

Nomura Holdings Inc. slipped on speculation it will report lower quarterly profit. Asian energy-related shares such as PetroChina Co. advanced after a two-day gain in crude oil prices raised some investors' earnings expectations.

The Morgan Stanley Capital International Asia-Pacific Index lost 0.01 point to 131.89 as of 2:47 p.m. in Tokyo, falling from its highest since May 19. The measure, which earlier gained 0.4 percent, rose 0.9 percent in the past four days. Japan's Nikkei 225 Stock Average dropped 0.4 percent to 16,719.73.

Technology stocks declined. Benq Corp. slumped after reporting a record third-quarter loss, while NEC Corp. slid after U.S. regulators requested documents following a delay in the company's annual report.

Other benchmarks open for trading rose except in Taiwan and China. Hong Kong was little changed. Markets in India, Indonesia, Malaysia, Pakistan and Sri Lanka are closed for a holiday.

U.S. stocks rose yesterday, sending the Dow Jones Industrial Average to its eighth record in two weeks, as higher oil prices lifted energy producers and anticipation of a profit at General Motors Corp. buoyed the automaker's shares.

Loophole

Aiful, Japan's biggest consumer lender, slid 7 percent to 4,150 yen, adding to yesterday's 3.5 percent drop. Promise Co., the nation's third largest, declined 5.2 percent to 4,240 yen. Credit Saison Co., Japan's largest credit card provider by value, slumped 8.1 percent to 4,420 yen.

Kyodo News reported yesterday during afternoon trading the LDP has decided not to allow a higher ceiling on interest rates for some consumer loans. The party faced criticism from opposition lawmakers and some of its own members for a plan to allow higher rates for small and short-term loans, according to the report, which didn't identify the officials by name.

The LDP is drafting a bill to close a loophole that lets non-bank lenders charge more interest than the 20 percent maximum for banks.

Nomura, Japan's largest securities firm, slid 2.9 percent to 2,155 yen. The company may say today that second-quarter profit slumped 38 percent from a year earlier to 37.8 billion yen, according to Natsumu Tsujino, a Tokyo-based analyst at JPMorgan Chase & Co.

Oil Prices Rise

An index of energy stocks on MSCI's regional measure climbed 1.1 percent. Oil futures in New York gained 0.3 percent in after- hours trading, taking a two-day gain to 1.2 percent. Prices have slumped 24 percent since touching a record $78.40 a barrel on July 14.

PetroChina, China's largest oil producer, gained 0.9 percent to HK$8.64 in Hong Kong. Woodside Petroleum Ltd., Australia's second-biggest oil company, climbed 1.5 percent to A$38.18. Inpex Holdings Inc., Japan's largest oil explorer, rose 1.3 percent to 936,000 yen.

Benq, Taiwan's biggest cell-phone maker, fell 6.4 percent to NT$16.15. Its third-quarter net loss of NT$12.22 billion ($367 million) was three times higher than the median forecast of NT$4 billion in a Bloomberg survey of five analysts and came as Benq wrote down its investment in a German handset unit it acquired from Siemens AG last year.

NEC, Japan's largest personal-computer maker, slid 6.5 percent to 636 yen after saying it had received a letter of inquiry from the U.S. Securities and Exchange Commission.

South Korea

The company on Sept. 28 postponed its report for the year ended March 31 because its auditor asked for more information about the value of information technology contracts. NEC Electronics Corp., the company's chip subsidiary, slid 3.7 percent to 4,220 yen.

Shares of companies tied to South Korea's economy, Asia's third-largest, gained. The economy expanded 0.9 percent in the third quarter from the previous three months, the Bank of Korea said today, faster than the 0.8 percent median forecast in a Bloomberg survey of nine economists.

Growth was 0.8 percent in the second quarter. Business investment jumped 3.1 percent in the third quarter and construction rose 2.8 percent, the central bank said.

Daewoo Engineering & Construction Co., South Korea's biggest builder by market value, gained 3.1 percent to 20,200 won. Lotte Shopping Co., its largest department store chain, advanced 3 percent to 360,500 won.

``The South Korean economy probably hit bottom this year in July and August, improving through September,'' said Yoo Byung Ok, who manages about $2 billion in equities at Mirae Asset Investment Management Co. in Seoul. ``There's hope it will improve next year.''

Source:Bloomberg