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BEIJING/HONG KONG - Asian stocks tracked a steep Wall Street selloff on Thursday, as investors fretted over rising global inflation, China's zero-COVID policy and the Ukraine war, while the safe-haven dollar held most of its strong overnight gains.

MSCI's broadest index of Asia-Pacific shares outside Japan fell 2% in early Asian trading hours, the first daily decline in a week. Japan's Nikkei tumbled 2.4%.

Pulling it lower was a 1.5% loss for Australia's resource-heavy index, a 2.6% drop in Hong Kong stocks and a 1% retreat for blue chips in mainland China. Overnight on Wall Street, earnings reports from retail giants soured sentiment, with Target Corp warning of a bigger margin hit due to rising fuel and freight costs as it reported its quarterly profit had halved. One day earlier, Walmart Inc warned of similar margin squeezes.

Target's shares plunged 24.88%, the biggest one-day percentage drop since the "Black Monday" stock market crash on Oct. 19, 1987. On Wednesday, the Nasdaq fall almost 5% while the S&P 500 lost 4%.

"The bounce on Tuesday was proven to have been 'too optimistic', thus the self-doubt stemming from the misjudgement only makes traders to click the sell button even harder," said Hebe Chen, market analyst at IG.

"It must be said that the concern for inflation has never gone away since we stepped into 2022, however, while things haven't reached the point of no return, they are seemingly heading in the direction of 'out of control'. That, is probably the most worrying part for the market.

The U.S. dollar, which had rallied on falling risk appetite, paused its gains on Thursday, with the greenback easing 0.05% against a basket of major currencies. The Japanese yen, on the other hand, fell 0.2% against the dollar.

British inflation surged to its highest annual rate since 1982 as energy bills soared, while Canadian inflation rose to 6.8% last month, largely driven by rising food and shelter prices.

Bilal Hafeez, CEO of London-based research firm MacroHive, said there was a strong bias toward safe-haven assets right now, particularly cash.

"There may be short-term bounces in equities like the last few days, but the big picture is that the era of low yields are over, and we are transitioning to a higher rates environment," Hafeez told the Reuters Global Markets Forum. "This will pressure all the markets that benefited from low yields - especially equities."

U.S. Treasuries rallied overnight and were steady in Asia, leaving the yield on benchmark 10-year Treasury notes at 2.8931%.

The two-year yield, which rises with traders' expectations of higher Fed fund rates, touched 2.6715% compared with a U.S. close of 2.667%.

Oil futures were mixed on Thursday morning. U.S. crude dipped 0.2% to $109.38 a barrel. Brent crude rose 0.26% to $109.4 per barrel.

Gold was slightly lower with the spot price at $1,814.8899 per ounce. [GOL/]