SINGAPORE—Asian shares slid on Thursday, with Hong Kong and Seoul suffering their biggest drops in a month, as investors worried that data signalling a pick-up in Chinese inflation may prompt Beijing to raise interest rates.
The dollar fell further on expectations of U.S. rate cuts, especially after data earlier this week showed lower-then-feared core inflation. Gains in the yen and other Asian currencies pummeled shares of exporters.
European markets were set to open lower, shrugging off overnight U.S. gains, with financial bookmakers forecasting Britain's FTSE 100 would fall up to 27 points at the open.
China stocks fell more than 5 percent in Shanghai as investors braced for first-quarter economic growth data expected to be released at 0700 GMT. The release had been delayed from the morning to the afternoon, which some analysts said could be an attempt by authorities to blunt the market impact of what might be exceptionally strong figures. On Feb. 27 signs that China was overheating and concern that Beijing may crack down on rampant stock market speculation sent the Shanghai Composite Index skidding 9 percent–a slide that sent investors worldwide fleeing from riskier investments, such as emerging markets and stocks.
China's consumer prices rose 2.7 percent from a year earlier in the first quarter, a provincial office of the statistics bureau said earlier, fuelling concerns over an exceptionally high figure for March. March price data was also due to be released at 0700 GMT.
Hong Kong's Hang Seng, a major beneficiary of China's growth story, was down 2 percent by midday–its biggest fall since March 14.
Tokyo's Nikkei average ended the session down 1.7 percent, while MSCI's broadest index of shares elsewhere in Asia .MSCIAPJ fell 2 percent.
"It has a bit of similarity to February in that in each case the global markets had risen quite a bit and looked ready for falls when negative news from China came out," said Kim Yung-min, a fund manager at SH Asset Management.
South Korea's benchmark KOSPI index ended down 1.4 percent–its biggest percentage drop since March 14, when global stock markets were rattled by concerns over the U.S. housing market.
The index was dented by losses in Samsung Electronics and steel maker POSCO
Yen, Won Strengthen
The yen recovered from a bout of recent weakness–leaving exporters such as Japan's Canon Inc. 2 percent lower. By 0623 GMT the yen traded at 117.79 against the dollar.
Other regional currencies also strengthened, with China's yuan rising to 7.7190–the strongest level since its July 2005 revaluation.
South Korea's won hovered at a new 15-week high against the dollar at 928.60. It may continue to strengthen in line with China's yuan if China's hot economy continues to rage.
"The main worry is whether China will have to raise interest rates as a result," said Park Suk-hyun, an analyst at Kyobo Securities in Seoul.
"The won currency is approaching potentially worrisome levels, and that's having an impact on exporters.
Japanese government bond futures inched higher, pulling away from three-month lows hit the previous session, helped by overnight gains in U.S. Treasuries and the falls in Tokyo shares.
By 0504 GMT June 10-year JGB futures were up 0.34 point to 133.90 The benchmark 10-year JGB yield slipped 3.5 basis points to 1.670 percent Brent oil held dipped 11 cents to $62.62 a barrel after rebounding from the previous day's three-week low as renewed fears over Iran making nuclear fuel was offset by the restart of a pipeline carrying oil from Canada.
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