Asian stocks fell yesterday from a six-week high after the US Federal Reserve said it may raise interest rates to curb inflation. Toyota Motor Corp and BHP Billiton Ltd led declines among companies that rely on US sales.

"The minutes from the Fed reminded investors of the threat of inflation," said Andrew Wang, who manages US$228 million at Prudential Securities Investment Trust Co in Taiwan. "A delay in a rate cut in the US will hurt profit prospects of Asian exporters and a rate increase will be worse."

Paladin Resources Ltd, an Australian uranium explorer, declined after raising its stock offer for Summit Resources Ltd by 20 percent. Japanese steel makers gained after Nippon Steel Corp agreed to boost output at a venture in China, Bloomberg News said.

Japan's Nikkei 225 Stock Average and the broader Topix index dipped 0.7 percent. The Philippine Stock Exchange Index slid 2.2 percent, Asia's biggest drop.

Benchmarks fell elsewhere except in South Korea and Australia, which closed at new highs. Indexes also gained in New Zealand, Malaysia and Pakistan.

US shares fell on Wednesday for the first time this month, with the Standard & Poor's 500 Index losing 0.7 percent after the Fed released minutes from a March 20-21 policy meeting.

"The combination of generally weaker-than-expected economic indicators and uncomfortably high readings on inflation suggested increased downside risks to economic growth and greater uncertainty that the expected gradual decline in core inflation would materialize," the minutes said.

Toyota, Japan's largest auto maker, dropped 1.3 percent to 7,370 yen (US$61.80). The company generated more than a third of its fiscal 2006 revenue in North America. BHP, the world's largest mining company, slid 1.2 percent to A$30.23 (US$24.94).

Paladin slid 3.7 percent to A$10 while Nippon Steel, Japan's biggest steelmaker, gained one percent to 816 yen.