Stocks: Friday’s review

Asian stocks fell for a second day amid economic reports indicating Europe’s debt crisis is contributing to slower growth in Japan, South Korea and China.

Stocks fell after the European Central Bank damped speculation it would step up debt purchases.

European Central Bank President Mario Draghi, speaking after the bank announced an interest rate cut, said he was “surprised” that markets interpreted earlier comments as hinting at big bond buys. He said a euro-zone “fiscal compact” is the “most important precondition” for normalizing markets and “the responsibility is with the leaders.”

Later in Brussels, Europe leaders laid out a new fiscal plan to prevent future debt runups, accelerated the startup of a planned 500 billion-euro rescue fund and scaled back bondholder loss-sharing provisions.

On Friday Kawasaki Kisen dropped the most in the Nikkei 225, falling 5.4% after Mitsubishi UFJ Morgan Stanley cut the shipping line’s stock price estimate to 180 yen from 200 yen, citing falling cargo rates on European routes.

Developers also declined after Miki Shoji Co. said the vacancy rate for Tokyo office space rose to 8.9 percent in November from 8.78 percent the month before.

Mitsui Fudosan sank 3.6%, Mitsubishi Estate Co. declined 3.4%, Sumitomo Realty & Development Co. slid 3.8%.

European stocks advanced after the euro-area leaders agreed on a fiscal union and a report said China’s central bank will set up $300 billion of funds to invest overseas.

Banks climbed after policy makers watered down a demand that bondholders share the cost of bailing out debt-ridden euro nations.

German Chancellor Angela Merkel said the leaders of the 17 euro nations agreed to tighten budget controls and channel 200 billion euros ($267 billion) through the International Monetary Fund to nations requiring assistance.

In an accord hailed by ECB President Mario Draghi, the leaders outlined a fiscal plan to prevent future debt run-ups, accelerated the start of a planned 500 billion-euro rescue fund and diluted bondholder loss-sharing provisions.

A Reuters report said China will create a new investment vehicle to improve returns on its foreign-exchange reserves. The vehicle will operate one fund targeting investment in the U.S. and another focused on Europe, Reuters reported, citing an unidentified person with knowledge of the matter.

National benchmark indexes climbed in most of western European markets.

Company:

Barclays rallied 5.4%, Intesa Sanpaolo SpA rose 7.9%, Deutsche Bank increased 4.7%.

Daimler jumped 4.1%. The maker of luxury vehicles said its Mercedes-Benz car factories are operating at “near full capacity.”

Alcatel jumped 7.1% after Sanford C. Bernstein & Co. raised its recommendation for France’s largest telecommunications equipment supplier to “outperform” from “market perform” and called for a breakup of the company to give a “significant upside” to shareholders.