Asian stocks fell on concern that demand for commodities in the world's fastest growing major economy may slow after China raised interest rates for the first time in nine years. Nippon Steel Corp and BHP Billiton declined.
Morgan Stanley Capital International's Asia-Pacific Index, which tracks more than 900 companies, lost 0.2 percent to 91.49 in Tokyo. The benchmark tracking commodity stocks accounted for almost half of the decline. Japan's Nikkei 225 Stock Average shed 0.8 percent, sliding for a third week.
The Shanghai Composite Index lost 1.6 percent after the central bank raised its one-year lending and deposit rates 0.27 percentage point to 5.58 percent and 2.25 percent, respectively. China's economy has doubled in size and its imports have tripled since the last time the central bank raised rates in 1995.
"The sell-off in stocks is a knee-jerk reaction because some investors assume that an interest-rate rise is automatically bad for Chinese growth," said Tom Murphy, who oversees the equivalent of US$290 million at Deutsche Private Banking in Sydney. "They don't understand that in the long term the hike will lead to more sustainable growth."
Nippon Steel, Japan's largest steelmaker, lost 3.1 percent to 248 yen (US$2.34). JFE Holdings Inc, the second-biggest steelmaker in Japan, declined 2.4 percent to 2,845 yen.
BHP, the world's biggest miner, slid 3.4 percent to 13.85 Australian dollars (US$10.34). China accounted for 9.8 percent of BHP's sales. Posco, South Korea's biggest steelmaker, shed 2.1 percent to 167,500 won (US$149.54).