Stocks Fall in Asia, Europe on China Rate Concern; Yen Rises

April 19 (Bloomberg) -- Stocks dropped in Asia and Europe on concern China will raise interest rates in response to faster- than-forecast economic expansion.

China Vanke Co., the Asian country's biggest developer, and BHP Billiton Ltd., the world's largest mining company, fell. The Morgan Stanley Capital International World Index, a global equity gauge, slid from an all-time high. The yen and U.S. Treasuries gained.

Economic growth in China reached 11.1 percent in the first quarter from a year earlier and inflation accelerated to 3.3 percent, the fastest pace in more than two years. Today's stock slump raised concern after China sparked a rout on Feb. 27 that ended up wiping $3.3 trillion from equity market values worldwide.

``Expansion at this speed raises fears the government will introduce measures to cool the economy, reigniting concerns about the health of the global economy,'' said Bo Lundstroem, an equity strategist at SEB Enskilda in Stockholm. ``The stocks that have benefited the most recently from robust demand from Asia, such as basic-resource companies and exporters, are taking the biggest hit today.''

The MSCI World lost 0.5 percent to 1568.86 at 12:16 p.m. in London. The MSCI Asia-Pacific Index dropped 1.4 percent to 147.22. The benchmark also climbed to a record yesterday, recovering from the slump that began in February.

Europe's Dow Jones Stoxx 600 Index declined 0.9 percent to 382.58, the most since March 14.

U.S. Futures

Standard & Poor's 500 Index futures expiring in June sank 7.9 to 1472.4. Dow Jones Industrial Average futures fell 65 to 12,793. Nasdaq-100 Index futures slid 12.25 to 1836. The Dow average closed at a record yesterday after JPMorgan Chase & Co. reported earnings that beat analyst estimates.

The data on China's growth follows a report two days ago that showed inflation in the U.K. unexpectedly accelerated to the fastest pace in a decade. That fueled speculation borrowing costs may rise in Europe's second-largest economy and triggered a decline in shares.

Stocks have more than recovered from the February rout as mergers and acquisitions outweighed concern that global growth will slow. The MSCI World as of yesterday had gained 8.9 percent from its low for the year reached on March 5.

China's benchmark CSI 300 Index tumbled 4.7 percent today, the most in seven weeks, before the government released the report on gross domestic product.

China Vanke slid 1.32 yuan, or 7 percent, to 17.44. Citic Securities Co., China's biggest publicly traded brokerage, dropped 1.99 yuan, or 4 percent, to 47.48.

`Concrete' Risk

``The Chinese economy is growing too much and the risk that the government will take measures to stop it overheating is concrete now,'' said Mario Menendez-Mato, director of brokerage Orient Finance in Paris. ``The bull market was very strong in China and was highly driven by speculation, so the risks of a correction are big.''

China's first-quarter growth report had been delayed until after the close of stock trading in Shanghai. The median estimate of 24 economists surveyed by Bloomberg News was for expansion of 10.4 percent, the same as in the previous quarter.

China has increased borrowing costs three times to cool the world's fastest-growing major economy and curb an inflation rate that rose to the highest in more than two years in March.

The Hang Seng China Enterprises Index, which tracks the so- called H Shares of 41 mainland companies, dropped 3.2 percent in Hong Kong. China Mobile Ltd., the world's largest mobile-phone operator by users, slid 4.1 percent to HK$72.50.

Canon, Toyota

In Japan, the Nikkei 225 Stock Average slid 295.36, or 1.7 percent, to 17,371.97, its biggest drop since March 14. Shares of Japan's largest companies such as Canon Inc. and Toyota Motor Corp. declined.

In London, BHP lost 1.2 percent to 1113 pence. Rio Tinto Group, the world's third-largest mining company, retreated 1.8 percent to 3063 pence.

The yen climbed as investors sought a haven from stocks, and on speculation the Bank of Japan will raise its key interest rate, the lowest among major economies. Investors take advantage of Japan's 0.5 percent overnight rate to conduct so-called carry trades in which they borrow funds to invest in higher-yielding assets in Europe, Australia and New Zealand.

China's stock slump ``may lead to risk aversion again, which caused the global downturn in stocks in February,'' said Takashi Miyachi, a senior currency dealer in Tokyo at Mizuho Corporate Bank Ltd. ``Investors are wary of the unwinding of yen carry trades.''

Yen, Treasuries

The yen rose to 117.78 after reaching 117.61, the strongest since April 2, compared with 118.68 in New York yesterday. It climbed to 160.09 per euro from 161.51 yesterday and a record low of 162.43 on April 16.

The 10-year Treasury yield fell 2 basis points to 4.63 percent, according to New York-based bond broker Cantor Fitzgerald LP. The price of the 4 5/8 percent security due in February 2017 rose 5/32, or $1.56 per $1,000 face amount, to 99 30/32. The yield, which moves inversely to the price, has fallen a combined 13 basis points this week.