Jan. 29 (Bloomberg) -- Asian stocks fell after comments from the Federal Reserve suggested it will raise U.S. interest rates sooner than expected, sparking concern demand will slow for exporters such as Toyota Motor Corp. and Samsung Electronics Co.

The Fed unexpectedly dropped its commitment to hold interest rates low ``for a considerable period,'' saying instead that they would be ``patient'' in keeping down borrowing costs.

The comments suggest ``the Fed will raise rates earlier than expected and the worry is that the profit recovery we're seeing in the U.S. will slow down,'' said Chan Hock Fai, who helps manage the equivalent of $2 billion at APS Asset Management in Singapore. ``The effects may be felt in the region given that the U.S. is one of the engines of growth.''

The MSCI Asia Pacific Index, which tracks more than 800 stocks in the region, slid 1.2 percent. Japan's Nikkei 225 Stock Average fell 0.7 percent to 10,779.44 at the 3 p.m. close in Tokyo, its fourth straight day of decline and the longest losing streak since the period ended Aug. 7.

All major benchmarks in markets open for trading fell, apart from China's, which resumed trading after an eight-day holiday for the Lunar New Year.

The Philippine Stock Exchange Composite Index was the biggest decliner in Asia, having its steepest drop in almost six months. The detention of dissident army officers raised concern that a possible coup attempt may destabilize the government before elections in May.

Fed Rates

Toyota, the world's second-largest automaker, shed 1.1 percent to 3,550 yen. The automaker derives about 82 percent of operating profit from North America. Samsung Electronics, South Korea's largest exporter, lost 0.9 percent to 533,000 won. It gets about a fifth of sales in the U.S.

The Federal Open Market Committee voted unanimously to leave the overnight bank-lending rate at 1 percent, the lowest since 1958. The next FOMC meeting is scheduled for March 16.

Sony Corp., the world's No. 2 consumer electronics maker, fell 1.4 percent to 4,260 yen. Sony, which gets more than a quarter of its sales from the U.S., said yesterday third-quarter operating profit at its main electronics unit fell 39 percent.

``These are not good numbers,'' said Scott McGlashan, who manages $125 million as chairman of Jade Absolute Fund Managers in London. ``The company is still struggling.''

U.S. Customers

A rate increase may slow consumer and business spending in the U.S., hindering a recovery in Japan. Overseas sales and capital spending accounted for all of Japan's 1.4 percent annual pace of economic growth in the third quarter last year.

South Korea's Kospi index declined 0.7 percent to 853.47. The U.S. was South Korea's second-largest export market last year after China. Hyundai Motor Co., which relies on exports for more than a half of its sales, slid 3.9 percent to 51,200 won.

Hong Kong's Hang Seng Index dropped 1.7 percent to 13,208.47. Li & Fung Ltd., which buys clothing for U.S. clients including Reebok International Ltd., fell 1.4 percent to HK$14.30. Yue Yuen Industrial (Holdings) Ltd., which makes footwear for Nike Inc., shed 2 percent to HK$22.50.

``The chance of the Fed raising rates has gone up, and whenever they tighten it's bad for Asia markets,'' said Hou Wey Fook, who oversees about $2 billion as chief investment officer at OCBC Asset Management Ltd. in Singapore.

Venture Corp., Singapore's largest electronics maker for companies such as Hewlett-Packard Co., declined 2.2 percent, to S$22.10. Australia's BHP Billiton shed 0.6 percent to A$11.37. The world's largest miner gets 85 percent of its sales overseas.

`Spooked'

``Investors were clearly spooked by the change in tone coming out of the Fed last night,'' said Tom Murphy, who helps manage $290 million at Deutsche Private Banking in Sydney.

New Zealand's NZSX 50 dropped 1.4 percent. The nation's central bank unexpectedly raised its key interest rate a quarter point to 5.25 percent because inflation is accelerating amid a housing boom and a surge in consumer spending. Eleven of 14 analysts in a Bloomberg survey had forecast no change.

Telecom Corp., the country's biggest phone company and the largest company by market value, fell 1.2 percent to NZ$5.59.

The Philippine Composite Index slid 2.2 percent to 1515.15, its biggest decline since Aug. 4.

Armed Forces spokesman Danilo Lucero said the soldiers had been detained for questioning though there is no evidence of a military rebellion, as some local news agencies are reporting.

Philippine Long Distance Telephone Co., the nation's largest phone company by customer, fell 2.7 percent, to 920 pesos. Ayala Land Inc., the nation's largest property developer, declined 4.7 percent, to 6.10 pesos.

China United Telecommunications Corp., which controls the nation's second-largest mobile-phone operator, rose 2.5 percent to 4.86 yuan in its first trading day after the holidays.

The company said Jan. 21 that it handled a record 50 billion text messages last year as more Chinese used cell phones to send greetings, read news and fix appointments. The number more than tripled from 15 billion in 2002, it said.

Last Updated: January 29, 2004 01:34 EST