Asian stock markets were mostly lower Tuesday as investors continued their flight from risky assets on the prospect of slower Chinese growth and the winding down of the U.S. Federal Reserve's monetary stimulus, AP reported.
Markets in China extended declines from the previous day as investors worried that measures to curb underground lending would hurt growth in the world's second-largest economy.
The Shanghai Composite Index was down 0.2 percent to 1,958.62 after earlier plunging nearly 4 percent. Hong Kong's Hang Seng fell 0.2 percent to 19,780.12, trimming earlier losses.
Japan's Nikkei 225 shed 0.7 percent to 12,969.34. South Korea's Kospi dropped 1 percent to 1,780.63 and Australia's S&P/ASX 200 was down 0.3 percent to 4,656. Stocks in the Philippines and Indonesia also declined while India and Singapore gained.
A rise in the yield on the 10-year U.S. Treasury note compounded worries for investors, an analyst said, which could spur more selling of stocks in emerging markets as the cost of borrowing increases.
"A rise in interest rates is a very bad variable for the market," said YS Ryoo, an analyst at Hyundai Securities in Seoul. "Because the cost of borrowing the dollar rises, dollar funds will try to return home quickly."
In Seoul, market heavyweight Samsung Electronics Co. sank 1.2 percent to close at the lowest level since November. In Tokyo, Nissan Motor Co. fell 1.1 percent even after its chief executive promised strong sales growth to shareholders.
Shanghai's stock index endured its biggest loss in four years Monday after the country's central bank allowed commercial lending rates to spike higher. Analysts say the move was part of an effort to curb off-balance-sheet lending in China that could threaten the country's financial stability.
But the higher lending rates could also hurt economic growth. The impact for stock markets would be all the greater if the U.S. Federal Reserve tightens its own ultra-loose monetary policy over the coming months, as it has signaled it would do so long as the U.S. economy improves according to its forecasts