TOKYO (Bloomberg) -- Asian stocks fell the most since August on concern rising credit costs will dent bank earnings and slowing U.S. growth will curb demand for televisions and cameras.

Mitsubishi UFJ Financial Group Inc. and Westpac Banking Corp. dropped as credit risk in the region rose to records, signaling expectations of an increase in global loan defaults. Sony Corp. and Samsung Electronics Co. led declines among companies reliant on U.S. sales after manufacturing shrank and mortgage foreclosures climbed.
“We’re seeing a pipeline of bad news, be it bank write-downs or the deterioration of the U.S. economy,” said Ivan Leung, who helps manage $350 billion as Hong Kong-based chief investment strategist at JPMorgan Private Bank. “Markets are selling off whenever there’s bad news and, to us, that's not indicative of a recovery.”
The MSCI Asia Pacific Index declined 5.4 percent to 139.61, the biggest weekly slump since the five days ending Aug. 17. Financial stocks posted the second-largest percentage decrease among the index's 10 industry groups, trailing energy shares.
The MSCI regional measure has fallen 12 percent this year on concern a U.S. housing slump will drag the world’s largest economy into recession and slow global growth.
Most benchmarks in the region fell, with India’s Sensitive Index slipping 9.1 percent. Japan's Nikkei 225 Stock Average dropped 6 percent this week, the biggest retreat since August. The Australian All Ordinaries Index tumbled 5.4 percent, the most since December 1987. Hong Kong’s Hang Seng Index sank 7.5 percent, the steepest since March 2001.
ABC Learning Centres Ltd. lost almost a third of its value in Sydney on concern its sale of a stake in U.S. childcare centers will dent earnings.
------------------------Banks defaults
Mitsubishi UFJ, Japan’s largest publicly traded bank, fell 8.9 percent to 862 yen. Sumitomo Mitsui Financial Group Inc., the No. 2 Japanese bank, dropped 11 percent to 684,000 yen. Westpac Banking, Australia's fourth-largest bank, tumbled 9.4 percent to A$21.14, the biggest weekly decline since May 1999.
The cost to protect corporate bonds in Australia and Japan from default rose the most since the gauges were first compiled in 2004, as rising funding costs for banks stoked concerns financial firms may collapse. Australia’s central bank raised its key interest rate this week to the highest in almost 12 years.
Sony, the second-biggest maker of electronics, fell 7.6 percent to 4,610 yen. Canon Inc., the biggest maker of digital cameras, declined 6 percent to 4,530 yen. Both companies derive more than a quarter of their sales from the U.S.
Manufacturing in the U.S. shrank at the fastest pace in almost five years and construction spending fell the most since 1994, reports showed.
ABC Learning, the world's biggest publicly traded childcare center owner, fell 31 percent to A$1.47, the biggest percentage decline on MSCI’s Asian gauge. The Australia-based company sold a 60 percent stake in its U.S. childcare centers to Morgan Stanley for A$750 million ($698 million), prompting concern profit growth will slow.