LONDON (SHARECAST) - Concern that the US Federal Reserve will tighten monetary policy sent Asian markets tumbling on Thursday while nerves about who will be appointed the new Bank of Japan governor hit markets hard.
Minutes from the Federal Reserve's latest policy meeting said officials plan to review its quantitative easing programme in March, fuelling expectations that the central bank may to scale back or end its bond buying programme sooner than expected. Wall Street ended lower overnight.
The benchmark Nikkei 225 index closed down 159 points at 11,309 in Tokyo while the broader Topix dropped 1.1% to 962 in thinner than usual trading. The Hang Seng slumped 400 points at 22,906 in Hong Kong.
Meanwhile growing concern about friction between Prime Minister Shinzo Abe and Finance Minister Taro Aso in choosing a new BoJ governor also weighed on market sentiment.
Abe has called for more aggressive measures to end deflation and boost growth while Aso is expected to choose a candidate in favour of more moderate policies.
Shares falling fast included Canon, down 1.2%, while industrial robot maker Fanuc fell 2.2%. Fast Retailing dropped 2.1% and Suzuki Motor reversed 2.3% in Tokyo. Panasonic dropped 1.8%.
Financials came under pressure with Sumitomo Mitsui Financial down 2.8%, Mitsubishi UFJ Financial declined 2.4% while Mizuho Financial lost 2%.
However markets nerves sent defensive stocks higher on Thursday. Shares of pharmaceutical company Dainippon Sumitomo Pharma jumped 3.5%.
Commodities in Hong Kong suffered a broad sell-off with Jiangxi Copper tumbling 5.9% while Zijin Mining retreated 2.4%. Aluminium Corp of China or Chalco declined 2.5%.