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Asian markets tumble as investors fear stagflation

Stocks in Japan and China follow lead from decline in U.S. retailers

The slump across Asia came after lackluster earnings results from major U.S. retailers stoked concerns that rising consumer prices would cool the economy. (Photo by Tetsuya Kitayama)

TOKYO -- Asia's stock markets tumbled on Thursday as global inflation started to hurt corporate earnings, spurring fears of stagflation -- inflation combined with stagnation of economic output.

Japan's blue-chip Nikkei Stock Average dropped over 760 points, or 3%, at one point before closing down 1.9% at 26,402. South Korea's Kospi fell 1.3%. Hong Kong's Hang Seng Index was down 3.5% intraday.

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