Asian stocks slide as inflation fears rise

By Kevin Plumberg

HONG KONG (Reuters) - Asian stocks fell on Monday, with shares in Japan suffering their biggest fall in six weeks, as investors feared rising inflation and sluggish U.S. economic growth would seriously dent consumer demand in the region's biggest export market.

Oil prices edged higher as the dollar eased, but trade in Asia was subdued with the U.S. and UK financial markets closed on Monday for national holidays.

Major stock indexes in Japan and China dropped more than 2 percent after U.S. markets last week chalked up their biggest decline in three months as oil prices rocketed to record highs, heightening concern about consumer demand and company earnings.

"The market is going to start thinking about real economies. China has held up somewhat but margins are getting squeezed by higher oil and higher materials prices," said Garry Evans, pan-Asian equity strategist with HSBC in Hong Kong.

By 6.00 a.m. GMT (7 a.m. British time), Japan's Nikkei share average posted its largest single-day decline in six weeks, down 2.3 percent, led lower by exporters such as Canon and clothing firm Fast Retailing.

The MSCI index of Asian stocks outside Japan fell 1.4 percent.

China Mobile stock tumbled 7.5 percent, helping to knock down Hong Kong's Hang Seng index after Goldman Sachs downgraded shares of the world's largest wireless carrier to "sell" following a sector-wide restructuring plan announced last week which will increase competition.

South Korea's KOSPI slid 1.5 percent to its lowest since April 24. Shares of Samsung Electronics, the world's second-largest mobile phone maker, were the biggest drag on the index, tumbling 4 percent, on talk that Nokia may cut prices and re-enter the South Korean market.