Stock markets in Hong Kong and the rest of Asia tumbled yesterday as fresh United States data added to concerns that higher inflation would prompt the Federal Reserve to start raising interest rates more aggressively. A lower than expected fourth-quarter sales forecast from Intel Corp also hit technology stocks, and the sell-off coming on the anniversary of the 1987 stock market crash, when the Dow Jones dived 23 per cent in one day, added to the nervous trading. The Hang Seng Index fell 1.54 per cent to 14,372.76 points, its lowest close in more than three months, with HSBC Holdings, China Mobile, Hutchison Whampoa and CNOOC leading the slide. Other markets fared worse, with Seoul down 2.79 per cent in its biggest one-day drop in six months, Taipei off 2.34 per cent and Singapore 2.89 per cent lower. The Tokyo market fell 1.66 per cent, with exporters under heavy selling pressure amid fears higher borrowing costs would weaken demand for Asian exports. The US producer price index jumped 1.9 per cent last month from August, against a forecast of 1.2 per cent driven largely by soaring fuel prices. 'The PPI numbers did hit the market because [they came at a time when] Fed officials are sounding more hawkish and the Intel guidance was quite bearish, but I am surprised at the degree of the fall,' said Sakthi Siva, the chief Asian strategist at UBS. The fall set off a 'buy' signal for Asian equities on the bank's valuation indicator. Market watchers said the Hang Seng Index was looking oversold from a technical perspective and should see support slightly above 14,200 points at the 200-day moving average trend line. But not everyone was convinced. 'Is the current sell-off overdone? Perhaps, but I wouldn't be aggressively buying the market on those premises because we are trapped in a bit of a sentiment bubble at the moment,' a trader said. The head of Asian strategy at a European bank also shrugged off the talk of a regional rebound. 'Asia has received about US$3 billion of hot money in the past three years when rates go up, that money will leave and the recent currency weakness is the first sign of that happening,' he said.