TOKYO (Bloomberg) -- Asian stocks slumped, dragging the regional benchmark index from a three-month high, as lower-than- expected profit at China Mobile Ltd. and the prospect of rising bank losses curbed optimism the global economy is recovering.

China Mobile, the world’s biggest wireless carrier, sank 5.5 percent in Hong Kong. Orix Corp., Japan’s No. 1 non-bank financial company, dropped 6.1 percent in Tokyo as Nomura Holdings Inc. downgraded the stock and Bank of America Corp. set aside more money to cover loan losses. Australia’s BHP Billiton Ltd., the world’s largest mining company, lost 4.2 percent as oil and metals prices slumped.
The MSCI Asia Pacific Index lost 2.1 percent to 88.14 as of 2:51 p.m. in Tokyo, retreating from its highest close since Jan. 7. A 27 percent rally from a five-year low reached on March 9 had lifted the valuation of companies on the gauge on Monday to the highest since November 2007.
“You’re seeing cold water being poured on the theme of a sharp rebound in growth,” said Tim Schroeders, who helps manage about $1 billion at Pengana Capital Ltd. in Melbourne. “It’s encouraging that a bottom has been perceived, but given the likelihood of a protracted period of low growth, some of these share prices ran ahead of reality.”
Japan’s Nikkei 225 Stock Average tumbled 2.1 percent to 8,733.55. Australia’s S&P/ASX 200 Index slumped 2.6 percent as the central bank governor said the economy is in a recession. All of the region’s biggest markets declined.
Mitsubishi Corp., Japan’s No. 1 trading company, slumped 5.9 percent in Tokyo after the Nikkei newspaper said falling coal prices will erode profits. Sony Corp., the world’s second- biggest consumer electronics maker, lost 4 percent, while Singapore’s Neptune Orient Lines Ltd., the biggest container carrier in Southeast Asia, slumped 3.6 percent as brokerages downgraded their shares.
Financial shares
China Mobile slid 5.5 percent to HK$70.20. First-quarter net income rose 5.2 percent to 25.2 billion yuan ($3.3 billion), the company reported on Monday, the slowest growth rate in five years. The result missed the 26.5 billion yuan median estimate of five analysts in a Bloomberg survey as intensifying competition undermined earnings.
Financial companies accounted for 35 percent of the MSCI Asia Pacific Index’s decline on Tuesday. Orix, whose shares have more than doubled in the past month, retreated 6.1 percent to 4,460 yen. Wataru Ohtsuka, an analyst at Nomura, lowered Orix to “neutral” from “buy,” on the view that recent gains have reduced the attractiveness of the shares.
HSBC Holdings Plc, which owns a U.S. mortgage business, fell 5.8 percent to HK$51.75 in Hong Kong. Shinhan Financial Group Co., South Korea’s second-biggest financial company, dropped 2.9 percent to 29,000 won.
Sony downgrade
Newcrest Mining Ltd., Australia’s largest gold producer, jumped 4.9 percent to A$29.21, tracking gains in the precious metal’s price. Zijin Mining Group Co., China’s largest gold producer, added 1.7 percent to HK$6 in Hong Kong.
Mitsubishi, which owns a coal-mining venture with BHP, slumped 5.9 percent to 1,581 yen. Mitsubishi may have a 100 billion yen ($1.02 billion) drop in net income for the year to March 2010 because of falling prices for coking coal, the Nikkei newspaper reported on Tuesday.
Rivals Mitsui & Co. and Itochu Corp. may also see lower coal prices hurt their profits by 10 billion yen to 30 billion yen, Nikkei said. Mitsui dropped 6 percent to 1,120 yen. Itochu sank 4.7 percent to 552 yen.
Sony lost 4 percent to 2,550 yen after Kota Ezawa, an analyst at Nikko Citigroup, downgraded the stock to “hold” from “buy.” The global recession means it will take time for investors to see “a real earnings recovery” at Tokyo-based Sony, Ezawa wrote in a report.
Neptune Orient dropped 3.6 percent to S$1.35. The company was cut to “sell” from “neutral” at UBS AG.