TOKYO — Asian stock markets mostly dropped Wednesday as China's surprise interest rate hike raised fears that Chinese growth will slow, weighing on the global recovery.
The hike to the key rate, announced Tuesday, was the first for China since 2007 as it tries to control inflation and guide growth to a more sustainable level rather than revving up the economy. China's economy grew 10.3 percent in the second quarter.
The downdraft in Asian markets followed falls on Wall Street and in Europe. Oil rose above $80 a barrel after the China news dragged it down more than 4 percent the previous day.
"China's announcement was a big surprise for the market. Sentiment dampened across Asia as investors worried that a hike in interest rates could pressure China's economic growth," said Masatoshi Sato, market analyst at Mizuho Investors Securities Co. Ltd.
Japan's benchmark Nikkei 225 stock index dropped 207.59 points, or 2.2 percent, to 9,331.86 and Hong Kong's Hang Seng slid 1.5 percent to 23,417.13.
Australia's S&P/ASX 200 was off 1 percent at 4,608.00, the Shanghai Composite Index dropped 0.4 percent to 2,990.01 and Singapore's benchmark sank 0.8 percent to 3,165.57.
Bucking the downtrend, South Korea's Kospi advanced 0.3 percent to 1,863.56. Markets in Taiwan and Malaysia also rose.
In New York, the Dow Jones industrial average tumbled 165.07 points, or 1.5 percent, to 10,978.62, falling below 11,000 for the first time in a little more than a week.
In currencies, the dollar fell to 81.39 yen from 81.55 yen in New York late Tuesday. The euro climbed to $1.3770 from $1.3728.
Benchmark crude for November delivery was up 32 cents at $80.48 a barrel in electronic trading on the New York Mercantile Exchange. The contract fell $3.59, or 4.3 percent, to settle at $79.49 a barrel on Tuesday. (AP)