SYDNEY: Asian stocks fell for an eighth day, the longest streak since May 2005, as a bigger-than-estimated increase in Australian consumer prices fueled concern tighter monetary policies in the region will slow growth.

Westpac Banking Corp. slumped 2.4% in Sydney as investors increased bets the central bank will raise interest rates as early as next week. BHP Billiton Ltd., the world’s biggest mining company, sank 2% in Sydney after commodity prices slid. Toyota Motor Corp. fell 4.3% in Tokyo after saying it will halt US sales of models involved in a recall.

The MSCI Asia Pacific Index lost 0.7% at 118.57 as of 3:37 p.m. in Tokyo. The index slumped 6.5% in the past eight days as US President Barack Obama proposed measures to limit risk taking at banks and concern grew that China will rein in growth.

“There is less appetite for risk and a lot more cautiousness in the market,” said Stephen Halmarick, Sydney- based head of investment-markets research at Colonial First State Global Asset Management, which holds about $135 billion. “China’s tightening moves and the recent US banking regulation has unsettled people’s expectations about liquidity.”

Australia’s S&P/ASX 200 Index fell 1.6%, the biggest decline among the region’s developed markets. China’s Shanghai Composite Index dropped 0.3%, earlier falling below its 200-day moving average for the first time in two years. Hong Kong’s Hang Seng Index added 0.5%, rising from its lowest close in more than four months.

Shanghai, Hong Kong

Japan’s Nikkei 225 Stock Average sank 0.7% even as a government report showed the country’s exports climbed 12.1% in December. Among stocks that gained, Fuso Pharmaceutical Industries Ltd. surged 11% after forecasting a full-year profit. Kao Corp. gained 5% after reporting profit that beat its forecast.

The Kospi Index lost 0.7% after North Korea fired artillery off its west coast near the disputed maritime border with South Korea, prompting warning shots from the South.

Futures on the US Standard & Poor’s 500 Index were little changed. The gauge lost 0.4% yesterday as concern the Federal Reserve may signal more plans to unwind stimulus measures overshadowed higher-than-estimated earnings and consumer confidence.

Signs of a global economic recovery have driven a stock rally since March, lifting the average price of companies on the MSCI Asia Pacific Index to 1.6 times book value, near the highest level since September 2008.

Sluggish Growth

The International Monetary Fund raised its global economic growth forecast yesterday to 3.9% in 2010 from its October projection of 3.1%. The IMF said the recovery in industrial nations is expected to be “sluggish,” burdened by rising public debt and high unemployment rates. S&P downgraded Japan’s sovereign credit rating yesterday, citing a “slower pace of fiscal consolidation” than the company had expected.

Stocks have fallen in the past week as China took steps to cool its economy, which grew in the fourth quarter at the fastest pace since 2007. Chinese banks have begun restricting new loans, responding to a push by regulators to contain credit, people familiar with the matter said yesterday.

Westpac fell 2.4% to A$24.33 after the Australian statistics bureau’s consumer price index climbed 0.5% in the fourth quarter from the previous three months, more than the 0.4% increase economists expected. Australia & New Zealand Banking Group Ltd. lost 1.5% to A$21.96.

Woolworths’ Sales

Investors are betting there is a 68% chance of a quarter-point increase in Australia’s overnight cash rate target to 4% at the central bank’s next meeting on Feb. 2, according to Bloomberg calculations based on interbank futures on the Sydney Futures Exchange. Prior to today’s report, the chances of a February move were 56%.

Woolworths Ltd., Australia’s biggest retailer, declined 2.5% to A$26.80. The company posted the slowest second- quarter sales growth in at least eight years.

BHP sank 2.3% to A$40.30 and Rio Tinto Group, the world’s third-largest mining company, slumped 4.7% to A$69.90. Jiangxi Copper Co., China’s biggest producer, lost 1.4% to 35.17 yuan in Shanghai. Copper futures dropped 1.6% in New York yesterday, while crude oil slid 0.7%. Woodside Petroleum Ltd., Australia’s second-largest oil and gas producer, slumped 2.2% to A$43.02.

United Co. Rusal Ltd., the world’s top aluminum producer, slumped 8.4% to HK$9.89 in its Hong Kong debut. Rusal is the first Russian company to trade its shares in the city.

Quality Concerns

Toyota dropped 4.3% to 3,705 yen. The automaker, struggling to stem widening quality concerns, will suspend production and US sales of eight models that use a component that triggered a vehicle recall.

Dealers will temporarily stop selling RAV4, Highlander and Sequoia sport-utility vehicles, Corolla, Camry, Avalon and Matrix cars and Tundra pickups, Toyota said.

In Hong Kong, China Gas Holdings Ltd., seeking to tap mainland demand as China, declined 15% to HK$4.13. The company said it may pay as much as HK$2.12 billion ($270 million) in cash and new stock for Zhongyu Gas Holdings Ltd.

HTC Corp., maker of Google Inc.’s Nexus One Android smartphone, slumped 7% to NT$334.5 in Taipei, and was the MSCI Asia Pacific index’s second-biggest loser. Gross margin, a measure of profitability, will be 29.5% to 30.5% on an unconsolidated basis this quarter, compared with 32% last quarter, HTC said.

Defensive Stocks

Health-care, utilities and consumer-staple shares posted the biggest gains of the MSCI Asia Pacific Index’s 10 industry groups today as investors shifted to so-called defensive stocks.

“There’s a sense of caution,” said Naoki Fujiwara, chief fund manager at Shinkin Asset Management Co., which oversees the equivalent of $55 billion. “The economy in general is recovering and earnings are relatively good, so I’m not too worried. Stocks will continue to rise as long as the economic recovery carries on and earnings continue to show good results.”

In Tokyo, Fuso Pharmaceutical surged 11% to 309 yen. Net income is expected to be 850 million yen ($9.5 million) in the year ending March 31, compared with a previous estimate for a 50 million yen loss, Fuso said.

Kao Corp., Japan’s biggest maker of household products gained 5% to 2,255 yen. The company yesterday said net income for the first nine months of its fiscal year exceeded its full-year forecast. India’s Cadila Healthcare Ltd. jumped 8.3% to 704 rupees after the company said net income in the quarter to Dec. 31 more than doubled.

Obic Co., a computer-system service provider, was the MSCI Asia Pacific’s second-biggest advancer with a 6.9% surge to 16,620 yen. The company said net income rose 36% in the nine months ended Dec. 31. The stock was also boosted to “buy” from “neutral” at Nomura Holdings Inc.