Asian Stocks Stumble on US Growth Outlook

Asian markets weakened Thursday after news that the Federal Reserve lowered its forecasts for U.S. economic growth over the next three years.  

In fresh quarterly forecasts, the Fed projected the U.S. economy would contract by between 1.3 percent and 2.0 percent this year, with the unemployment rate rising to between 9.2 percent and 9.6 percent. In January, the Fed had forecast a milder contraction of between 0.5 percent and 1.3 percent, with the jobless rate rising to between 8.5 percent and 8.8 percent.

Oil gave back some gains after rallying to a six-month high, dipping below $62 a barrel after jumping more than 3 percent on Wednesday on news of a deep drop in U.S. crude and gasoline stockpiles.

The U.S. dollar plunged to its lowest in nearly five months against the euro and a basket of six major currencies after minutes showed Fed policymakers had mulled buying more securities at their last policy meeting in April to spur recovery-- a move which would inject more dollars into the market.   

Japan's Nikkei 225 Average fell 0.9 percent, dented by Honda Motor and other exporters as the yen climbed to a two-month high on the dollar and after the Federal Reserve cut its outlook for the U.S. economy.

Seoul shares closed almost 1 percent lower, led by industrial issues including Doosan Heavy Industries, but brokerages outperformed on the partial lifting of a short-selling ban.

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Hong Kong shares gave up 1.6 percent, falling for a second straight day as doubts emerged about an early turnaround in the global economy while a weak first quarter performance hit shares in Melco International.

Singapore's Straits Times Index was 2.4 percent lower with financials such as DBS Group leading the decline.

China's Shanghai Composite Index sank 1.5 percent as blue chips eased on renewed worries about the strength of China's economic recovery and high share valuations.