TOKYO - Asian stocks fell on Thursday, extending worldwide equity declines after new signs of sustained inflationary pressures in the United States boosted the case for elevated interest rates for longer periods.
The US dollar stayed close to its highest point since mid-March against major peers and reached a fresh 10-month high in the yen. Long-term Treasury yields hovered near two-week highs near 4.3 percent.
MSCI's broadest index of Asia-Pacific shares slid 0.68 percent, following declines in Wall Street and Europe.
Japan's Nikkei sagged 0.64 percent, on course to snap an eight-session win streak.
After a slide for the S&P 500 yesterday, US stock futures pointed to a loss of 0.2 percent after a slide of 0.7 percent.
German DAX futures were down 0.36 percent and the UK FTSE futures were down 0.26 percent.
The services sector unexpectedly peaked steam in August, suggesting strong inflationary forces, which led to a surge in Wall Street stock prices.
Although traders are still fairly certain the Fed will forego a rate hike this month, they put the risk of one by year-end at closer to a coin toss. The rate cut is not expected until June.
The dollar index, which tracks the currency against six developed-market peers, including the yen and euro, added 0.07 to 104.93. It rose to the highest since March 15 on Wednesday at 105.03.
The dollar rose to its strongest level since Nov 4 compared to the yen at 147.875.
The currency pair tends to change in step with long-term Treasury yields, which jumped to their highest since August 23 at 4.306 percent in the previous session.
The euro drooped 0.1 percent, to $1.0716, following its drop to a three-month trough of $1.0703.
The Australian dollar, often traded as a proxy for its top trading partner, eased 0.26 percent to $0.6366, keeping it close to this week's 10-month low.
Crude paused its steady climb of the past two weeks during Asian hours on Thursday.
Brent crude futures fell 24 cents to $90.36 a barrel after a nine-session winning streak. US West Texas Intermediate crude futures fell 29 cents to $87.25 after a seven-session gain.