The Democratic Party of Japan swept to power for the first time as the nation's voters turned their backs on half a century of single? party government that failed to reverse economic stagnation and spiraling welfare costs.

Japan's factory output rose at the slowest pace in four months in July and retail sales fell, underscoring the challenge for the incoming government to sustain an economic recovery. Production climbed 1.9 % from June, when it rose 2.3 %, the Trade Ministry said today in Tokyo. Economists surveyed by Bloomberg expected a 1.4 % gain. Retail sales slid 2.5 % from a year earlier, an 11th straight drop, extending the longest losing streak since 2003. Manufacturers were still producing 22.9 % less than a year ago, and economists say the monthly gains are too slow to prompt companies to invest in equipment and hire workers.

Asian stocks fell, led by mining companies and Japanese exporters, as the Democratic Party of Japan's election victory drove the yen higher and Chinese companies reported lower profit. Canon Inc., which gets
28 % of its revenue from the Americas, sank 3 %.

China's stocks fell for a third day, with the benchmark index set for its biggest monthly drop since October, after profits declined at Baoshan Iron & Steel Co., China Southern Airlines Co. and China Merchants Bank Co. Baoshan Steel, the nation's biggest steelmaker, slipped 4.4 % and China Southern lost 3.9 %. China Merchants Bank Co. fell 5.8 % after saying it also plans to increase the size of a rights offer.

The Shanghai Composite Index lost 150.05, or 5.3 %, to 2,710.64 as of 10:55 a. m., set for its lowest close since May 27. It's down 21 % this month, headed for its worst performance since October, when it tumbled 25 %. The index more than doubled from November to this year's Aug. 4 peak on a 4 trillion yuan ($586 bn) government stimulus plan and record bank loans in the first half of 2008.

U. K. house prices rose for the first time in two years in August as a dearth of homes for sale pushed up prices in London and the southeast, Hometrack Ltd. said. The average cost of a home in England and Wales rose 0.1 % from July to 155,800 pounds
($253,000), the London? based property research company said in an e? mailed statement today. The increase, the first since July 2007, left house prices 6.7 % lower than a year earlier, the smallest annual decline in a year.