SINGAPORE (Bloomberg) -- Asian stocks fell, led by Toyota Motor Corp. and Taiwan Semiconductor Manufacturing Co., after the largest U.S. mortgage lender said home-loan losses are increasing.

“The sub-par outlook for the U.S. economy will continue into the first half of next year and so the market is focusing on the negatives,” said Shane Oliver, who helps manage the equivalent of $83 billion at AMP Capital Investors in Sydney. Canon Inc. and Honda Motor Co. dropped after the yen rose beyond 120 per dollar for the first time in two months. BHP Billiton Ltd. slid in tandem with oil and metals prices. South Korea's KOSPI index closed above 2,000 for the first time after Moody's Investors Service raised the nation's credit ratings, while China’s CSI 300 Index also ended at a high. The Morgan Stanley Capital International Asia Pacific Index lost 0.5 percent to 160.67 as of 6:09 p.m. in Tokyo, after rising 0.9 percent to a record Tuesday. Consumer stocks such as Toyota and raw-material producers including BHP were the biggest drags among the measure's 10 industry groups. The Nikkei 225 Stock Average slid 0.8 percent to 17,858.42, and benchmarks in Australia, Hong Kong, and Singapore all fell from records. The Standard & Poor's 500 Index dropped 2 percent Tuesday, the steepest retreat in four months. Countrywide Financial Corp., which accounts for almost a fifth of U.S. mortgages, said second-quarter profit fell 33 percent to 81 cents a share and said property demand is unlikely to strengthen before 2009. ------------------ Exporters fall Toyota, which got more than a third of its sales last year from North America, slid 1.3 percent to 7,410 yen, set for its biggest drop since June 8. HSBC Holdings Plc dropped 1 percent to HK$143.80. Two-thirds of the lender's $10.6 billion in loan defaults last year were in North America. “Whether Asia, or Hong Kong in particular, will be seriously hit depends on liquidity,” said Renault Kam, a Hong Kong-based director of Atlantis Investment Management Ltd., which oversees about $4 billion in Asia. “Fund flows seem to remain pretty strong.” Taiwan Semiconductor, the world's largest maker of customized computer chips, fell 2.4 percent to NT$69.60. James Hardie Industries NV, the No. 1 seller of home siding in the U.S., lost 2.9 percent to A$8.30 in Australia. --------------- Metals, oil BHP, the world's largest mining company, fell 1.9 percent to A$38.05. Rio Tinto Group, the third largest, slid 2.3 percent to A$97.20. The two led declines on the S&P/ASX 200 Index in Australia, where the government said Wednesday consumer prices rose more than expected in the second quarter, stoking concern the central bank will increase interest rates as soon as next month. Nippon Mining Holdings Inc., Japan's biggest copper smelter, declined 2.8 percent to 1,239 yen. A measure of six metals traded on the London Metal Exchange, including copper and nickel, lost 0.7 percent Tuesday. Copper fell 0.8 percent, while nickel dropped 3.6 percent. Meanwhile, crude oil for September delivery fell as much as 0.6 percent in after-hours electronic trading on the New York Mercantile Exchange on speculation U.S. gasoline production will be sufficient to meet late summer demand. Futures were recently at $73.52, after a three-day, 3.1 percent loss. PetroChina Co., the nation's largest producer, fell 1.6 percent to HK$12.10 in Hong Kong. INPEX Holdings Inc., Japan's largest explorer, dropped 3.2 percent to 1.22 million yen. Woodside Petroleum Ltd., the largest in Australia after BHP, lost 0.6 percent to A$44.90. -------------- Yen strength Canon, the world's No. 1 maker of digital cameras, slid 2 percent to 7,050 yen. Honda, Japan's No. 2 automaker by sales fell 1.8 percent to 4,420 yen. North America accounted for 55 percent of the company's sales last year. The yen climbed to as high as 119.81 against the dollar from 120.56 at the close of trading in Tokyo Tuesday. It has gained 1.8 percent against the dollar in the past five days, the strongest performance among the world's major currencies. The appreciation erodes the local-currency value of sales to the world's biggest economy. Matsushita Electric Industrial Co., the world's largest consumer-electronics maker, plunged 3.6 percent to 2,285 yen after the company Tuesday cut its full-year net income forecast by 1.6 percent to 246 billion yen ($2.1 billion). Profit for the first quarter ended June 30 rose 10 percent, the company said after the close of trading Wednesday. “The weakening trend in the yen seems to be ended,” said Masaki Iso, who oversees about $7.3 billion as head of Japanese equities at Yasuda Asset Management Co. in Tokyo. ------------ Korea, China The KOSPI rose 0.6 percent to close at 2,004.22, reversing an earlier drop of as much as 1.5 percent, after Moody's raised the nation's sovereign credit ratings one level to A2 for the first time in five years, signaling a lower risk of debt default. That may help reduce companies' borrowing costs. Also helping boost shares, the central bank said the economy grew 1.7 percent in the quarter ended June 30, beating the 1.3 percent forecast by economists in a Bloomberg survey. Shinhan Financial Group Ltd., South Korea's No. 2 lender, rose 1.9 percent to 66, 200 won. Credit Suisse Group Wednesday raised its share-price forecast by 17 percent. Hyundai Securities Co., the fourth-largest brokerage, jumped 6.6 percent to 33,200 won. China's CSI 300 Index climbed 2.3 percent to 4,255.46, surpassing a record set June 19. Air China Ltd., the nation's largest international carrier, jumped 6.9 percent to 12.02 yuan after predicting higher earnings for the first half. Industrial & Commercial Bank of China Ltd. rose 2.6 percent to 5.84 yuan, helping the company overtake Citigroup Inc. to become the world's largest bank by market value. Wednesday's gain took its market capitalization to $244.5 billion, more than Citigroup's $243.9 billion