HONG KONG (Bloomberg) -- Asian stocks fell for a third week, dragging a key index to its longest weekly losing streak in three months, on concern widening credit-market losses will slow economic growth and rising fuel costs will erode earnings.

Commonwealth Bank of Australia declined after Freddie Mac, the second-biggest U.S. mortgage-finance company, reported a record loss. Toyota Motor Co. dropped after the Federal Reserve cut its forecast for U.S. economic growth. Air China Ltd. slid on speculation jet-fuel costs will increase after crude prices climbed to almost $100 a barrel.
“A spate of bad news related to the U.S. sub-prime-loan issue has made the outlook uncertain,” said Kazuyuki Terao, who helps oversee $1.7 billion at RCM Japan Ltd. in Tokyo. “With the chances of a U.S. economic slowdown on the rise, there are concerns that high commodity prices could squeeze corporate profits.”
The MSCI Asia Pacific Index fell 2.5 percent this week, its third-straight weekly decline and the longest weekly losing streak since the period ended Aug. 17. All major regional benchmarks fell, with Japan’s Nikkei 225 Stock Average sliding 1.8 percent. Japan’s markets were closed on Nov. 23. for a holiday.
South Korea’s Kospi index dropped 8 percent this week, the most among key benchmarks. Hyundai Heavy Industries Ltd. paced a drop among capital-goods makers on speculation slower global growth will damp demand for machinery, generators, and ships.
Concerns that sub-prime losses will widen and that the U.S. economy will slow have dragged the MSCI Asia Pacific down by 10.4 percent in November, putting the stock benchmark on course for the worst month since September 2001.
---------------------------------- Sub-prime losses
Commonwealth Bank, Australia’s second-biggest lender, dropped 4.6 percent to A$57.20. Macquarie Group Ltd., the country’s largest securities firm, fell 5 percent to A$76.49. The slump in U.S. sub-prime mortgages contributed to the value of a fund sliding 27 percent in July, Macquarie previously said.
HSBC Holdings Plc., Europe’s biggest bank, lost 3.3 percent to HK$131.70. Its North America earnings in the first-half slumped 35 percent to $2.44 billion because of loan defaults by sub-prime borrowers, the lender said on July 30.
Freddie Mac posted a third-quarter net loss that was three times what some analysts estimated. The worst housing slump in 16 years caused “significant deterioration” in the period that will continue through year-end, Freddie Mac said.
------------------------------------- Correction?
Losses from U.S. sub-prime-mortgage foreclosures, coupled with slowing economic growth and falling house prices, could reach as much as $300 billion, the Organization for Economic Cooperation and Development said in a report released in Paris. “A recession in the U.S. is now seen as more likely than before by some observers,” the report said.
“There are concerns the U.S. economy may slow down more and longer than expected,” said Kim Young Il, who oversees $1.1 billion at Hanwha Investment Trust Management Co. in Seoul. “The current correction may last two or three months.”
Toyota Motor, the world’s most valuable carmaker, slipped 3.9 percent to 5,870 yen. Techtronic Industries Co., which supplies power tools to Home Depot Inc., slid 7.6 percent to HK$7.17.
In the minutes from its October policy meeting, the Fed lowered its 2008 growth forecast for the U.S., the largest market for Asian exports, to as little as 1.8 percent from a previous estimate of 2.5 percent to 2.75 percent.
------------------------------------ Oil prices
Air China, the world’s biggest airline by market value, fell 7.9 percent in the week to HK$7.93 in Hong Kong. Singapore Airlines Ltd., the second-biggest, dropped 2.8 percent to S$17.40.
Crude oil futures advanced this week to 98.18 a barrel in New York, after reaching an intra-day record of $99.29 on Nov. 21.
In South Korea, Hyundai Heavy, the world’s largest shipbuilder, plunged 17 percent to 390,500 won. Doosan Heavy Industries & Construction Co., the country’s biggest maker of power generators, sank 12 percent to 122,000 won.
“Equipment makers and manufacturers of machines are not attractive when global economic growth is weak because companies will not be expanding,” said Kim Woo Sik, who manages $328 million at SH Asset Management Co. in Seoul.