ASIA MARKETS: Asia Markets Swoon; Japan, Hong Kong Plunge

By V. Phani Kumar, MarketWatch

HONG KONG (MarketWatch) -- Asian stocks swooned Thursday after uncertainty over U.S. monetary policy led to more losses on Wall Street, with Japanese shares plunging toward their sixth loss in seven sessions as a strengthening yen hurt exporters.

Leading the deep losses suffered across most of the region, the Nikkei Stock Average plummeted 6.2% to 12,466.48 -- dropping back below the 13,000-point level it had recaptured in early April but briefly lost earlier this month. The broader Topix shed 4.9%.

The declines came as the U.S. dollar fell under the Yen95-level, and after U.S. stocks finished lower for a third straight session overnight on concerns the Federal Reserve could taper down its bond purchases.

The dollar's tumble against the yen "will put regional markets under pressure, but it may also [force] the U.S. Fed to reconsider its tapering plans in the face of a global sell off," said Kim Eng Securities director of sales trading Andrew Sullivan.

The losses on Wall Street reinforced "the notion that the market is similar to a junkie who needs a constant fix, which in this case comes in the form of monetary stimulus," said CMC Markets sales trader Miguel Audencial.

"Even a slight indication or the speculation that this stimulus will be scaled down may ignite a sell-off," Audencial said.

Meanwhile, China's Shanghai Composite tumbled 3.3% as the markets reopened for the first time this week after a string of holidays, giving investors a chance to react to a string of downbeat economic data released over the weekend, including the monthly trade and inflation figures.

Hong Kong's Hang Seng Index skidded 3.1%, and South Korea's Kospi lost 0.9%.

Australia's S&P/ASX 200 fell 1.1% to enter so-called correction territory -- having dropped more than 10% from the highs reached in May. The benchmark remained in negative territory despite official data showing an unexpected improvement in employment data for May.

Stock movers

In Japan, stocks found little respite as the U.S. dollar (USDJPY) fell under the Yen95 level, raising more fears about the earnings outlook of companies with a significant international presence.

Shares of Fast Retailing Co. (FRCOY) skidded 8.1%, Mazda Motor Corp. (MZDAY) slumped 4.6%, and Sharp Corp. (SHCAY) lost 7.4%.

"The combination of elevated risk aversion and disappointment over recent policy announcements, in particular the lack of detail about Prime Minister [Shinzo] Abe's 'third arrow,' has prompted ever more upside for the [yen]" said Crédit Agricole forex strategy chief Mitul Kotecha.

Property developers suffered heavy losses in China. Gemdale Corp. slumped 5.7% in Shanghai, while China Resources Land Ltd. (CRBJF) skidded 4.7% in Hong Kong.

In Sydney, mining stocks came under pressure, with BHP Billiton Ltd. (BHP) lower by 2.4%, and Fortescue Metals Group Ltd. (FSUMY) sliding 2.1%.

Rio Tinto Ltd. shares (RIO) declined 1.9%. The company said it plans to sell its Eagle nickel and copper project to Lundin Mining Corp.

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