Asia’s benchmark stock index fell from a three-week high and commodities prices declined after Federal Reserve Chairman Ben S. Bernanke said “significant” challenges remain to revive the world’s biggest economy.

The MSCI Asia Pacific Index dropped 0.3 percent to 118.93 at 2:25 p.m. in Hong Kong after touching 119.93, the highest level since Oct. 26. Copper fell 0.9 percent as metals led commodities lower. Westpac Banking Corp. lost 2.3 percent in Sydney, where the Australian central bank said the pace of interest-rate increases was an “open question.” Gold was 0.8 percent below its record.
The U.S. economic recovery will be restrained by the “headwinds” of reduced bank lending and a weak labor market, and “future setbacks are possible,” Bernanke said in a speech to the Economic Club of New York Monday. The MSCI World Index of developed and emerging markets has climbed 72 percent from this year’s low to trade at 30 times the earnings of its companies, the most since January.
“The market’s been doing pretty well in grinding to higher levels over a long period of time but it’s not without danger,” said Tim Schroeders, who helps manage $1.1 billion at Pengana Capital Ltd. in Melbourne. “What we’re seeing is a period of consolidation. Things don’t just go up in a straight line.”
Banks and technology shares were the biggest drag on the MSCI Asia Pacific Index. Hynix Semiconductor Inc. sank 6.6 percent, the most in almost two months, after the Electronic Times said creditors will sell as much as 15 percent of the company.
‘Cold water’
“We’ve got to see continued improvements in profitability and in the market’s ability to absorb new issues of equity,” said Schroeders.
“Bernanke probably poured a little bit of cold water on a few people in terms of anticipated growth trajectory for the U.S. and any ensuing inflation.”
The euro weakened against the yen for a fourth day and declined versus the dollar after Dominique Strauss-Kahn, the managing director of the International Monetary Fund, said a global recovery is likely to be sluggish. The dollar index against six major currencies including the euro and the yen was at 74.940, near a 15-month low, and down 7.9 percent this year.
Taiwan stocks and the currency pared earlier gains on concern a financial cooperation agreement with China lacked details and will take months to implement. The benchmark Taiex index fell 0.8 percent to 7,733.21 in Taipei, after gaining as much as 1.1 percent. The Taiwan dollar was up 0.2 percent at NT$32.12, according to Taipei Forex Inc.
Platinum gain
Platinum, used to clean car exhaust systems, jumped to $1,454 an ounce, its highest price since September last year, before reversing to trade 0.4 percent lower at $1,438.50. Gold was little changed at $1,135.64 an ounce after touching a record $1,143.60 Monday. The London Metal Exchange index of six metals reached 3,136.1 Monday, the highest level since September 2008.
Copper has more than doubled this year as $11.9 trillion of stimulus measures pledged by Group of 20 governments to ease credit and revive economic growth pull the world out of recession. APEC leaders, who represent 54 percent of the global economy, said over the weekend they will keep steps designed to stimulate the economy until there is “durable” growth.
U.S. reports on industrial production and producer prices are scheduled later Tuesday. Output at factories, mines and utilities climbed 0.4 percent in October following an increase of 0.7 percent the previous month, according to the median forecast of 75 economists surveyed by Bloomberg News before Tuesday’s report. The Federal Reserve’s industrial production figures are due at 9:15 a.m. in Washington.
A separate report from the Labor Department will show prices paid to producers rose 0.5 percent in October, reflecting higher food and fuel costs, according to the median estimate by economists. From a year earlier, producer prices probably fell 1.8 percent.
(Source: Bloomberg)