AP Business Writer
BANGKOK (AP) -- Uncertainty about the U.S. Federal Reserve's next course of action and a sharp, sudden plunge on Wall Street sent Asian stock markets lower Monday.
Japan's Nikkei 225 index lost 3 percent to 13,359.16, echoing U.S. stock market losses Friday. The Dow dropped more than 200 points, its worst drop in six weeks. The Nikkei also weakened as the Japanese currency posted gains against the dollar, a currency movement seen as negative for Japan's exporters since their products become more expensive when sold overseas.
The Federal Reserve is spending $85 billion a month on buying bonds to push down interest rates in hopes of spurring borrowing and spending. That has propelled investors into stock markets in search of higher returns.
Encouraging reports on housing and hiring, along with a soaring stock market, have led many to suspect that the Fed could cut back on its bond buying in the coming months. Some believe the stock market could plunge without the Fed's support.
South Korea's Kospi fell 0.3 percent to 1,994.37. Australia's S&P/ASX 200 fell 0.5 percent to 4,903.90. Benchmarks in Indonesia, Singapore, the Philippines and Taiwan fell. Benchmarks in mainland China were mixed.
Analysts at Credit Agricole CIB in Hong Kong said that "the background is set for a further increase in uncertainty and market volatility this week."
Hong Kong's Hang Seng rose 0.5 percent to 22,495.61 after a report showed China's manufacturing activity shrank more than expected. HSBC's monthly purchasing managers' index, released Monday, fell to 49.2 in May. That's down from 50.4 in April. Analysts had expected the May level to come in at 49.6. Readings below 50 indicate a contraction.
A similar survey released Saturday found manufacturing ticked up slightly. That report by the government-sanctioned China Federation of Logistics and Purchasing found manufacturing edged up to 50.8.
"The initial reaction to the HSBC data was selling but I expect we will see the HSI try to grind higher today," said Andrew Sullivan of Kim Eng Securities in Hong Kong.
Among individual stocks, Australia's Cochlear plunged more than 17 percent after the hearing implant maker reported slowing growth this year.
Some Japanese exporter shares were battered. Sony Corp. fell 5.6 percent. Mazda Motor Corp. fell 5.9 percent.
On Friday, the Dow Jones industrial average closed down 1.4 percent to 15,115.57. The Standard & Poor's 500 index fell 1.4 percent, to 1,630.74. The Nasdaq composite index fell 1 percent to 3,455.91.
Benchmark oil for July delivery fell 5 cents to $91.92 per barrel in electronic trading on the New York Mercantile Exchange. The contract fell $1.64 to close at $91.97 a barrel on the Nymex on Friday.
In currencies, the euro rose to $1.3012 from $1.2981 late Friday in New York. The dollar fell to 100.48 yen from 100.69 yen.
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