Singapore: Asian stock markets fell on Thursday, with Tokyo shares down as much as 2.4 per cent.
It came as investors were spooked by heavy losses in US stocks and bet interest rates would keep rising.
The Nikkei average slid below the 16,000 mark for the first time in two months as exporters such as Honda Motor Co. Ltd. and Fanuc Ltd. lost ground following the sharp sell-off in US shares.
By 0420, the index had edged back to 16047.00, down 1.6 per cent, while MSCI's index of non-Japan Asian shares was 2.5 per cent lower.
"The market is very afraid of inflation and about the possibility of interest rate increases (in the United States),'' said Kim Joong-hyun, an analyst at Goodmorning Shinhan Securities in Seoul.
Crude, gold and base metal prices also slipped as stock markets from Europe to the Americas were shaken by an unexpected rise in US core inflation.
The dollar fell slightly against the yen after posting its biggest one-day gain since June on Wednesday.
The benchmark indexes in Hong Kong, South Korea, Taiwan, Australia and Singapore tracked the Nikkei's reaction, dropping by as much as three per cent.
"We are watching stock price movements as one economic indicator, and will continue to monitor them closely,'' said Japan's Chief Cabinet Secretary Shinzo Abe ''But we are not swayed by every move.''
US stocks wiped out $64 billion in market value from the 30 companies that make up the Dow industrial average index, giving the blue-chip average its biggest one-day point drop in three years.
The sharp sell-off in stocks was part of a broader market rout, with US Treasuries also tumbling amid signs of accelerating inflation.
Economic data showed the pace of inflation accelerated in April, boosting speculation that the Fed would raise rates longer than Wall Street had expected.
US consumer prices, excluding food and energy, rose 0.3 per cent in April, higher than market expectations for a 0.2 per cent increase.
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Tokyo Surprised
''Rather than any domestic factor, I think the decline in US stocks is pretty much 100-per cent responsible for the fall in Tokyo today,'' said Soichiro Monji, chief strategist of equity management at Daiwa SB Investments.
The Nikkei is now on track to book its seventh decline in eight sessions, having erased more than 1,300 points since its close on May 8.
South Korea's KOSPI slid as much as 3 percent to seven-week lows on weakness in financial issues such as top lender Kookmin Bank, Shinhan Finance Group Market heavyweight Samsung Electronics shed around 2 per cent.
In Australia, declines of more than 3.4 percent for mining giant BHP Billiton and around 1.5 percent for Commonwealth Bank helped push the S&P/ASX 200 index down some 2 percent to seven-week lows.
Hong Kong's benchmark index were more than 2 per cent lower, and Taiwan stocks fell around 1.2 per cent.
The Dow dropped more than 200 points, or 1.88 per cent. The market's rout left the Nasdaq mired in its longest losing streak in five years. It lost 1.5 per cent.
Oil prices fell towards $68 a barrel, pressured by rising US gasoline inventories and concerns that high energy costs are leading to inflation that could slow demand.
US light crude oil was trading 33 cents lower at $68.36 a barrel, extending Wednesday's 84-cent loss. Gold fell as the US dollar retained most of its gains against other currencies.
Spot gold slipped to $679.80/680.60 an ounce from $690.90/691.70 late in New York.
The dollar pared some gains after shooting higher following suggestions from European officials that the euro's rapid rise in the past month could stymie economic growth in the region.
The dollar was at 110.64 yen at 0430 GMT, after surging to 111.35 yen on Wednesday. The euro bought $1.2751. Japanese government bond prices dipped, hurt by the fall in US Treasuries.
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