Asia stocks fall as dollar rises

HONG KONG: Most Asian stock markets fell Thursday as the dollar strengthened after the Federal Reserve signaled it would start undoing some of its emergency supports next year as the economic recovery gathers pace.

Major indexes were down by about 1 percent or less. The dollar gained ground against most currencies, sending the euro to its lowest point in months and weighing on commodity prices.

The Fed, while reiterating its pledge to keep interest rates near zero, noted improvements in the economy at the close of a two-day meeting Wednesday and detailed plans to begin removing a number of its extraordinary lending measures in 2010.

The news stirred speculation the central bank might increase interest rates sooner than expected, leading many investors to shift back into the greenback. America's ultra-low borrowing costs have contributed to a weaker dollar this year, with traders selling it for higher-yielding assets like stocks, commodities and foreign currencies.

In Japan, the Nikkei 225 stock average shed 13.61 points, or 0.1 percent, to 10,163.80, and Hong Kong's Hang Seng slid 260.26 points, or 1.2 percent, to 21,351.48.

Elsewhere, Korea's Kospi dropped 1 percent to 1,647.84, Taiwan's market lost 0.1 percent and India's Sensex was down 0.4 percent. Shanghai's market tumbled 2.3 percent to 3,180.86.

Australia's market bucked the trend, adding 0.2 percent.

Wednesday in the U.S., the Dow Jones industrial average fell 10.88, or 0.1 percent, to 10,441.12, after rising as much as 58 points.

The broader Standard & Poor's 500 index rose 1.25, or 0.1 percent, 1,109.18. It is up 22.8 percent for the year. The Nasdaq composite index rose 5.86, or 0.3 percent, to 2,206.91.

U.S. futures retreated, suggesting a lower open on Wall Street Thursday.

The dollar, meanwhile, traded higher at 90.05 yen from 89.75 yen. The euro dropped over 0.8 percent to $1.4413 from $1.4534.

Oil prices fell in Asia, with benchmark crude for January delivery down 37 cents to $72.29. On Wednesday, the contract surged by $1.97.