Asia markets fall; Nikkei drops 2 pct on Toyota's bad news

The benchmark Shanghai Composite Index dropped 1.2 percent to 3,613.5 points. The Shenzhen Composite Index fell 0.5 percent to 1,097.4.

The Shanghai benchmark fell as much as 2.9 percent earlier in the day after the government reported that the producer price index, a key inflation indicator, rose 8.1 percent in April compared with the same month a year ago.

The rise in producer prices raised concerns that April consumer pricing data, due Monday, will show a persistently high rate of inflation. That could prompt Beijing to tighten its monetary policy further.

Among losers in Hong Kong, property firm Sino Land plunged 4.3 percent, and Hang Lung Properties dropped 3.1 percent.

In Shanghai, financial and property shares, those most acutely affected by monetary policy, led the decline.

Industrial & Commercial Bank of China fell 2.7 percent, China Merchants Bank slipped 1.7 percent and property leader China Vanke shed 1.1 percent.

Shares in Asian airlines were also under pressure as investors worried record high global oil prices could affect carriers' operation costs and earnings.

Japan Airlines in its earnings report said Friday that it had reduced losses in the January-March quarter from the same period last year on cost cuts, but it forecast more meager profits ahead, blaming soaring fuel costs.

Hong Kong airline Cathay Pacific sank 4.2 percent, while Japan Airlines fell 1.6 percent in Tokyo.

Elsewhere in Asia, major stock benchmarks fell in India, Indonesia, New Zealand, Singapore, South Korea, Taiwan and Thailand. Benchmarks in Australia, Malaysia and the Philippines bucked the regional downtrend to close higher.