HONG OKNG, Nov 13 — As the rout in commodities deepened in Asia, stocks in the region slumped, with mining and energy companies dragging Australia’s benchmark down the most in more than a month and Japan’s Topix index trimming its fourth straight weekly advance.

A gauge of Asian shares fell for the first time in three days as US oil lingered below US$42 (RM184.13) a barrel and copper futures traded near a six-year low amid concerns over China’s slowdown and whether it will crimp growth and demand for commodities globally.

The dollar held losses after Federal Reserve officials emphasized the need for a cautious approach to monetary policy, even as they reiterated their preference for a rate rise this year. Australia’s currency was headed for its first weekly advance since mid-October.

Divergent signals on global monetary policy continue to dominate financial markets, with Fed officials generally talking up the case for policy tightening at a conference yesterday, while European Central Bank chief Mario Draghi hinted at adding more stimulus.

Data this week has provided a mixed picture on China’s economy, reinvigorating concern that demand for raw materials will continue to wane while also fueling speculation officials there will resort to more easing.

The country’s broadest measure of new credit tumbled to a 15-month low, data late yesterday showed, as rate cuts fail to ignite borrowing.

“Central bank policy continues to be a major trading theme in the market and the other one is the pressure on commodity prices,” Matthew Sherwood, head of investment strategy at Perpetual Ltd in Sydney, which manages about US$21 billion, said by phone.

“Most central banks will be easing and the Fed will be hiking very, very cautiously. That has investors nervous about equity prices and potential earnings growth and so we’re seeing quite a pickup in volatility.”

Stocks

The MSCI Asia Pacific Index lost 0.7 per cent by 9:46am in Tokyo, swelling its drop in the week to 0.8 per cent. Gauges of expected price swings in the region climbed, with Japan’s Nikkei Stock Average Volatility Index snapping a seven-day retreat to jump 7.5 per cent.

Australia’s S&P/ASX 200 Index slid as much as 2.3 per cent, its steepest intraday drop since Sept. 29, as the Topix fell 1.2 per cent, cutting its weekly advance to 0.7 per cent. The S&P/NZX 50 Index slipped 0.4 per cent in Wellington, while South Korea’s Kospi index was down 1.1 per cent

In the futures market, contracts on the Standard & Poor’s 500 Index added 0.1 per cent after energy and resource producers led the US benchmark down 1.4 per cent last session.

US equities accelerated losses yesterday after the normally dovish New York Fed President William Dudley said the central bank may need to begin tightening policy. Fed President James Bullard of St. Louis earlier in the day urged raising target rates, while Chicago Fed leader Charles Evans stressed any increases should be “gradual.” Draghi said in Brussels that downside economic risks are “clearly visible” and policy makers will reexamine the degree of accommodation in December.

Elsewhere, futures on the Hang Seng Index—which jumped the most in a month last session—were down 1.1 per cent in most recent trading, as those on the Hang Seng China Enterprises Index, a gauge of mainland Chinese stocks listed in Hong Kong, dropped 0.9 per cent. FTSE China A50 Index futures fell 1.2 per cent and contracts on the Kospi index in Seoul indicated a loss of 0.6 per cent.

Currencies

The greenback remained in the doldrums today following two days of losses. The Bloomberg Dollar Spot Index, a gauge of the US currency against 10 major peers, was little changed after slipping 0.5 per cent the past two days. It’s headed for a drop in the week of the same magnitude.

Richmond Fed President Jeffrey Lacker said yesterday that caution is warranted in policy responses to financial markets, while Chicago’s Evans said US rates could be less than 1 per cent at the end of next year.

“Nobody specifically wanted to say yes to December or no to December,” said John Briggs, head of strategy for the Americas at RBS Securities Inc. in Stamford, Connecticut, referring to the Fed speakers.

“The important stuff now is we’re going to focus back on the data.”

The dollar index soared to its highest level in a decade last Friday after a better-than-expected US jobs report fueled bets on a rate increase from the Fed next month. A stronger greenback hits returns on dollar-denominated commodities and can erode the competitiveness of American exporters.

Odds that the Fed will boost borrowing costs at its last meeting of 2015 have risen to 66 per cent, compared with 35 per cent a month ago, according to futures data compiled by Bloomberg.

The Thai baht strengthened 0.2 per cent to 35.845 per dollar, while crude’s slump weighed on the Malaysian ringgit, which fell 0.3 per cent to extend its fifth straight weekly loss to 1.6 per cent.

The Aussie is the best performer among major currencies this week, rising 1.3 per cent to halt a four-week slide after unexpectedly strong employment data quelled speculation that the central bank there will engage in further easing. — Bloomberg