Asian shares sink after inflation-driven retreat on Wall St

BANGKOK (AP) — Shares sank in Asia on Monday after a report that U.S. inflation worsened last month sent stocks reeling on Wall Street.

Major regional markets dropped more than 2% in early trading Monday, while U.S. futures slipped more than 1%. On Friday, the S&P 500 sank 2.9%, locking in its ninth losing week in the last 10.

Investors had hoped the highly anticipated consumer price report would show the worst inflation in generations had slowed a touch last month, passing its peak. Instead, the U.S. government said inflation accelerated to 8.6% in May from 8.3% the month before.

Investors took Friday's report to suggest the Federal Reserve will persist in raising interest rates and making other moves in order to slow the economy, to try to force forcing down inflation.

Tokyo's Nikkei 225 index lost 2.6% to 27,088.86 and the Hang Seng in Hong Kong also gave up 2.6%, to 21,245.99. In South Korea, the Kospi declined 2.8% to 2,524.52, while the Shanghai Composite index dropped 1% to 3,252.58.

Markets in Australia were closed for a holiday.

On Friday, the S&P 500 sank 2.9% to lock in its ninth losing week in the last 10, and tumbling bond prices sent Treasury yields to their highest levels in years. The Dow Jones Industrial Average lost 2.7%, and the Nasdaq composite dropped 3.5%.

The growing expectation is for the Fed to raise its key short-term interest rate by half a percentage point at each of its next three meetings, beginning next week. That third one in September had been up for debate among investors in recent weeks. Only once since 2000 has the Fed raised rates by that much, last month.

Surging prices and expectations about Fed policy have sent the two-year Treasury yield to its highest level since 2008 and the S&P 500 down 18.7% from its record set...