Asian stocks fell today and the Nikkei slid to its lowest close in more than six months, as worries about slowing growth and rising interest rates in the United States hit shares in firms that rely on US demand.
Australia's S&P ASX 200 fell 0.2 per cent, Hong Kong's Hang Seng slid 0.7 per cent and Singapore's Straits Times fell 1 per cent. Taiwan's benchmark index fell 1.8 per cent to a two-month low.
Investors are awaiting interest rate decisions this week from the Bank of England and European Central Bank. Tokyo's Nikkei fell 1.9 per cent to its lowest close since November 30th, as exporters such as Sony were sold.
Oil eased towards $72 a barrel after Iran said a proposal by world powers to end a dispute over its nuclear programme had positive points, easing fears of potential supply disruptions.
Uncertainty about how the Fed will tackle inflation pressures has dragged on global markets in recent weeks, and Asian markets have suffered further from fears foreign investors are pulling money out in search of perceived safer alternatives.
"It's getting more and more likely the Fed will raise interest rates again, prompting foreign investors to pull out of emerging markets," said Sheng Yen, a fund manager of Franklin Templeton First Taiwan Securities Investment Trust.
St Louis Fed chief William Poole was quoted by the Wall Street Journal as saying that a slowing economy on its own may not reduce inflationary pressures, echoing comments made by Fed Chairman Ben Bernanke on Monday.
The comments led more people in the market to expect the Fed to extend its campaign of 16 straight interest rate rises by lifting its key rate from 5 per cent at its next meeting on June 28-29th.