SINGAPORE (REUTERS) - Asian stocks fell and the US dollar held firm on Thursday (May 12) as data showed US inflation persistently high, and investors worried about the economic toll of aggressive interest rate hikes to tame it.

MSCI's broadest index of Asia-Pacific shares outside Japan fell 1 per cent. Japan's Nikkei and Hong Kong's Hang Seng Index both dropped 0.8 per cent.

Singapore's Straits Times Index was down 0.7 per cent at 10.41am local time.

Bitcoin was pinned below US$30,000 on Thursday, nursing loses from an almost 27 per cent wipe-out that has taken US$11,000 off its price in about a week.

US markets whipsawed on Wednesday after the inflation news, then closed sharply lower.

On Thursday morning, S&P 500 futures rose 0.5 per cent in a bumpy Asia session. Foreign exchange trade was also volatile, but has left the dollar index within a whisker of a two-decade high.

Headline US consumer prices rose 8.3 per cent for the 12 months to April.

That was slower than the 8.5 per cent pace of a month earlier and raised hopes that the pace of price rises has peaked.

However, it was also higher than market forecasts for 8.1 per cent, and reaffirmed concerns that rates will need to rise quickly to tame it.

"We're now very much embedded with at least two further hikes of 50 basis points on the agenda. For equity markets that really is the end of free money," said Mr Damian Rooney, director of institutional sales at brokerage Argonaut in Perth.

"I think we probably were delusional six months ago with the rise of US equities on hopes and prayers and the madness of the meme stocks, and suddenly were going a little bit back to what is reality," he said.

Apple shares fell 5 per cent overnight, dragging the S&P 500 down 1.65 per cent and the Nasdaq down 3.2 per cent.

Short-dated Treasuries were dumped in the wake of the data, but the longer end of the curve rallied as investors worried steep rate hikes would slam the brakes on growth.

The benchmark 10-year Treasury yield fell six basis points (bps) overnight and dropped a further four bps in Tokyo trade to 2.8877 per cent. The gap between two-year and 10-year yields narrowed, flattening the yield curve.

"There should be a tipping point in how far the Fed can be pressed before odds clearly point towards a hard landing," said NatWest Markets' US rates strategist Jan Nevruzi.

Sell in May

The Nasdaq is down nearly 8 per cent this month so far and more than 25 per cent this year, bearing the brunt of selling as higher US yields draw money out of expensively priced tech stocks.

Cryptocurrency markets are also melting down, with the collapse of the so-called stablecoin TerraUSD highlighting the turmoil.

A weakening growth picture outside the United States too is battering investor confidence, as war in Ukraine threatens an energy crisis in Europe and lengthening lockdowns in China throw another spanner into supply chain chaos.

Property developer Sunac China said it missed a bond interest payment and will miss more as China's real estate sector remains in the grip of a credit crunch.

The uncertainty about nearly everything except US rate rises has benefited the dollar. It held the euro near recent lows at US$1.0524 on Thursday and hovered around 129.78 yen, while trade-sensitive currencies were squeezed.

The Australian dollar was volatile in the wake of the US inflation data, but was unable to hold its ground above US$0.70 and last bought US$0.6943.

Sterling was at a two-year low of US$1.2230 as a stand-off over post-Brexit trade rules for Northern Ireland deepens.

The Hong Kong Monetary Authority spent US$202 million on Thursday to support the Hong Kong dollar, which hit the weaker end of its peg to the greenback.

In commodity trade, oil steadied after a Wednesday surge amid concerns about westbound gas flows from Russia to Europe.

Brent crude futures edged 0.7 per cent lower to US$106.78 a barrel and US crude was 0.6 per cent lower at US$105.07 a barrel.

British activity and growth data is due later in the day.