SINGAPORE (Nov 21): Asian stocks headed for a weekly decline as the yen rose from a seven-year low and Japan premier Shinzo Abe prepared to dissolve parliament for elections.

The MSCI Asia Pacific Index fell less than 0.1 percent to 139.16 as of 9:13 a.m. in Tokyo, headed for a 1.8 percent drop this week. Abe and his cabinet will resign en masse today ahead of a December poll, scuppering plans for a second increase in the sales tax as he tries to salvage his reform program after data this week showed Asia’s second-largest economy is in recession. The yen traded at 118.13 per dollar after falling to as low as 118.98 yesterday, the weakest since August 2007.

Japan gearing up for elections “might mean we see a bit of a cautious tone today,” Stan Shamu, a markets strategist in Melbourne at IG Ltd., wrote in an e-mail to clients. “It’ll be interesting to see how it plays out as politicians are likely to start getting vocal.”

Futures on the Standard & Poor’s 500 Index sank 0.1 percent today. The U.S. equity benchmark gained 0.2 percent yesterday as data showing improvements in the economy overshadowed concern over weaker growth overseas.

Purchases of previously owned U.S. homes unexpectedly rose in October to a one-year high as low borrowing costs helped sustain the recovery in residential real estate. A Federal Reserve factory index for the Philadelphia region jumped, while other data showed fewer Americans filed for unemployment benefits last week.

Strong Fundamentals

“The fundamentals are strong,” Michael Shaoul, New York- based chief executive officer of Marketfield Asset Management LLC, said on Bloomberg Television. “Equity markets, certainly in the U.S., doesn’t want to go down. There has been economic acceleration in the U.S. over the summer.”

The economic picture in the U.S. contrasted with weakness in Europe and Asia. A purchasing managers’ index for factories and services activity in the euro area unexpectedly dropped in November, to the lowest level in 16 months, London-based Markit Economics said yesterday. In preliminary data indicated China factory activity would fall to a six-month low this month.

The MSCI Asia Pacific Index is heading for a weekly decline as mining companies tumbled after iron ore slumped to a five- year low and Chinese equities dropped following a slow start to the stock-trading link between the Shanghai and Hong Kong bourses offset. Mainland investors used less than 2 percent of their 10.5 billion yuan ($1.7 billion) daily quota to buy shares listed in Hong Kong yesterday.

Japan’s Topix index slid 0.4 percent. South Korea’s Kospi index added 0.3 percent. Australia’s S&P/ASX 200 Index dropped 0.3 percent. New Zealand’s NZX 50 Index slipped 0.4 percent. Markets in China and Hong Kong have yet to open.