ASIAN stocks closed sharply lower

Asian stocks slumped the most in almost two years amid concerns a credit crunch in China is worsening and the Federal Reserve will reduce stimulus should the U.S. economy continue to the improve.

The MSCI Asia Pacific Index dropped 4.2% to 127.52, heading for its biggest loss since March 2011, as nine shares fell for each that rose.

Chairman Ben S. Bernanke said yesterday the central bank may start dialing down its stimulus effort this year if the economy achieves the sustainable growth the Fed has sought since the recession ended in 2009. Markets across the region tumbled, with declines deepening after China’s interbank interest rates climbed and a preliminary survey showed a slump in manufacturing.

Japan’s Topix index slipped 1.3%, while the Nikkei 225 Stock Average decreased 1.7%. South Korea’s Kospi index declined 2%, while Taiwan’s Taiex index slid 1.4%. Australia’s S&P/ASX 200 Index dropped 2.1% and New Zealand’s NZX 50 Index lost 1.1%.

China’s Shanghai Composite Index fell 2.8% as a survey from HSBC Holdings Plc and Markit Economics added to signs of a deepening slowdown in the world’s second-largest economy. Hong Kong’s Hang Seng Index slumped 2.9%, the most since July 23, to the lowest since Sept. 13. The Hang Seng China Enterprise Index, a gauge of mainland companies in the city, plunged 3.3%.

Industrial & Commercial Bank of China Ltd., Asia’s biggest lender by market value, dropped 3.8% in Hong Kong, pacing declines among Chinese lenders. Samsung Electronics Co., the world’s No. 1 smartphone maker, slipped 2.9%. BHP Billiton Ltd., Australia’s top oil producer and the world’s biggest mining company, sank 2.6% as oil and metal futures decreased.

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