Asian Stocks Fall as Yen Rises; Treasury Yields Drop to Record

May 31 (Bloomberg) -- Asian stocks tumbled, heading for the biggest monthly drop in more than three years, while U.S. bond yields fell to a record low and the yen strengthened as divisions widened over solving Europe's debt crisis.

The MSCI Asia Pacific Index lost 0.7 percent as of 2:46 p.m. in Tokyo, set for an 11 percent monthly decline. Futures on the Standard & Poor's 500 Index rose 0.2 percent. Yields on 10- year Treasuries slid as much as 3 basis points to 1.59 percent, while similar-maturity Australian debt fell below 3 percent for the first time. The yen reached the highest in more than three months against the dollar. Rubber plunged 5.1 percent.

World stock markets have lost $4.1 trillion this month amid concern Europe's crisis is spreading. The cost of protecting Spanish bonds against default climbed to a record yesterday and a Greek poll showed support for anti-austerity parties ahead of elections next month, while the European Commission challenged Germany's remedies to the financial crisis. India's economy and Japan's industrial production expanded less than forecast by economists.

"The market is genuinely worried about the potential disorderly default and exit by Greece and what that means in terms of contagion risks," said Prasad Patkar, who helps manage about $1 billion at Platypus Asset Management Ltd. in Sydney. "It will have to be a response by governments and the central bank to stem the panic in the market."