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Japan’s Nikkei 225 briefly plunges 4%, leading losses across major markets in Asia

SINGAPORE — Shares in Asia-Pacific dropped in Monday trade, as Japan’s markets plummeted. Meanwhile, China kept its benchmark lending rate unchanged.

Japanese stocks led losses regionally, with the Nikkei 225 falling 4% in Monday trade. It later pared some of those losses but was still trading 3.43% lower in the afternoon. The Topix index shed 2.86%.

Losses were seen in most sectors in Japan, with shares of automakers such as Nissan and Honda falling more than 4% each. Shares of Fanuc slumped nearly 6%. Among financials, Mitsubishi UFJ Financial Group shares fell 2.94% and Mizuho Financial Group declined 2.03%.

Markets in Asia-Pacific slip

Elsewhere in Asia-Pacific, Hong Kong’s Hang Seng index dropped 1.35%. Mainland Chinese stocks were mixed as the Shanghai composite declined 0.22% and the Shenzhen component edged fractionally higher.

South Korea’s Kospi declined 1.09%. Shares in Australia slipped, with the S&P/ASX 200 shedding 1.67%.

MSCI’s broadest index of Asia-Pacific shares outside Japan fell 1.34%.

“Markets continue their post-FOMC slump as concerns over rate normalisation continues to keep a lid on risk sentiment,” analysts at Singapore’s OCBC Bank wrote in a note dated Monday.

Last week, the U.S. Federal Reserve raised its expectations for inflation and moved forward the timeline of its interest rate hikes, setting off a surge in the dollar index against a basket of its peers.

The U.S. dollar index was at 92.305 after a recent climb from levels below 91.2.

China on Monday announced that the one-year Loan Prime Rate (LPR) was kept unchanged at 3.85% while the five-year LPR was also held steady at 4.65%. That was in line with expectations of majority of analysts in a snap Reuters poll, who had predicted no change to the one-year Loan Prime Rate as well as the five-year LPR.

Currencies and oil

The Japanese yen traded at 109.81 per dollar, stronger than levels above 110.5 against the greenback seen last week. The Australian dollar changed hands at $0.7493, still struggling to recover after its fall last week from above $0.768.

Oil prices were higher in the afternoon of Asia trading hours, with international benchmark Brent crude futures up 0.52% to $73.89 per barrel. U.S. crude futures advanced 0.64% to $72.10 per barrel.

— CNBC’s Patti Domm contributed to this report.

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