Beijing, Aug 18 (AP) Asian stock markets followed Wall Street lower on Thursday after the Federal Reserve said US inflation is too high, suggesting support for more aggressive interest rate hikes.

Shanghai, Tokyo, Hong Kong and Sydney declined. Oil prices edged higher.

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Wall Street's benchmark S&P 500 index lost 0.7 per cent on Wednesday, ending a three-day series of rises, after notes from the Fed's July 26-27 board meeting showed members thought inflation still is “unacceptably high" despite signs US economic growth is weakening. It said the board saw “little evidence” inflation pressures are subsiding.

Investors worry aggressive rate hikes by the Fed and central banks in Europe and Asia to tame inflation that is running at multi-decade highs might derail global economic growth.

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The Fed notes raised “the prospects of further tightening" even if the pace of hikes slows, while other investors see possible “excessive tightening dragging growth,” said Venkateswaran Lavanya of Mizuho Bank in a report.

The Shanghai Composite Index lost 0.5 per cent to 3,276.62 and the Nikkei 225 in Tokyo sank 0.9 per cent to 28,967.91. The Hang Seng in Hong Kong shed 0.5 per cent to 19,821.28.

The Kospi in Seoul gave up 0.4 per cent to 2,507.31 and Sydney's SP-ASX 200 retreated 0.3 per cent to 7,109.20.

New Zealand and Bangkok declined while Singapore and Jakarta advanced.

On Wall Street, the S&P 500 fell to 4,274.04. The loss wiped out the week's gains and left the index down 0.1 per cent since Monday.

The Dow Jones Industrial Average sank 0.5 per cent to 33,980.32 and the Nasdaq slid 1.3 per cent to 12,938.12.

The Commerce Department reported July retail sales were flat compared with the previous month, defying predictions of a slight increase. Retailers have warned high inflation will discourage consumers from spending on non-essentials.

Retail chain Target fell 2.7 per cent after reporting a nearly 90 per cent plunge in second quarter profits. Children's clothing and accessories chain Children's Place fell 11 per cent after reporting a surprise loss due to supply problems and pressure from inflation.

Technology and communications stocks also fell.

The Fed notes Wednesday made clear the board plans to keep raising interest rates but gave no indication when or by how much.

The US central bank has hiked its benchmark lending rate twice this year by 0.75 percentage points, triple its usual margin. Forecasters say another hike of the same size is possible at the Fed's September meeting, though the likelihood has declined as data show the economy weakening.

In energy markets, benchmark US crude rose 8 cents to USD 88.19 per barrel in electronic trading on the New York Mercantile Exchange. It jumped USD 1.58 to USD 88.11 on Wednesday. Brent crude, the price basis for international trading, gained 11 cents to USD 93.76 per barrel in London. It surged USD 1.31 the previous session to USD 93.65.

The dollar edged up to 135.06 yen from Wednesday's 135.05 yen. The euro rose to USD 1.0183 from USD 1.0169.(AP)

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