Tokyo/Sydney/Shanghai/Hongkong: Asian stocks fell, dragging the MSCI Asia Pacific Index to its lowest in more than eight months, after Japan’s finance minister warned about continuing deflation and concern grew about Europe’s debt crisis.

Canon Inc., a camera maker that counts Europe as its biggest market by revenue, lost 2.7% in Tokyo. Surfwear maker Billabong International Ltd, which gets 23% of its sales in Europe, slumped 3.7% in Sydney. Toyota Motor Corp. sank 2.6% as the car maker offered repairs for an engine fault in its Passo subcompact models.

Concerns mount: An electronic board displaying Japan’s Nikkei share price in Tokyo on Wednesday. The Nikkei 225 Stock Average sank 1.5% to 10,030.31 on Thursday. Yuriko Nakao/Reuters

“With the volatility at present it’s difficult for investors to swim against the tide,“ said Tim Schroeders, who helps manage about $1.1 billion at Pengana Capital Ltd in Melbourne. Doubts over Europe’s ability to keep its own house in order remain, along with concerns about the robustness of global growth. Many investors are sitting on the sidelines until the way forward becomes clearer.

Japan’s Nikkei 225 Stock Average sank 1.5% to 10,030.31, as finance minister Naoto Kan warned that the economy continues to be in a deflationary state minutes after a government economic growth report missed estimates. The gauge briefly slid below 10,000 for the first time since 10 February.

Australia’s S&P/ASX 200 Index lost 1.6%. South Korea’s Kospi Index fell 1.8%.

China’s Shanghai Composite Index sank 1.2% and Hong Kong’s Hang Seng Index declined 0.2% amid concern Chinese property curbs will hurt earnings growth. Singapore’s Straits Times Index dropped 1% even after a government report showed the city-state’s economy grew at a faster pace than initially estimated.

Futures on the Standard & Poor’s 500 Index were little changed. The index slid 0.5% on Wednesday as Germany’s trading restrictions and a jump in mortgage foreclosures to a record triggered a flight from equities.

German regulators banned investors from naked short sales of 10 banks and insurers, as well as naked credit-default swaps on euro zone government bonds, starting Wednesday.

Short sellers borrow assets and sell them, betting the price will fall and they’ll be able to buy them later, return them to the lender and pocket the difference. In naked short-selling, traders never borrow the assets so betting is unlimited.

A Japanese government report showed the country’s economy expanded slower than economists expected in the first quarter, with more than half of growth coming from trade, and consumer spending contributing less than one-fifth.

Chinese developers fell after the nation’s economic planning agency on Wednesday said home transactions in some Chinese cities began decreasing in mid-April.

Chinese measures to rein in the country’s real-estate prices contributed to the MSCI Asia Pacific Index’s slump since April. Companies in the measure trade at an average 14.3 times estimated earnings, near the lowest level since December 2008.

Masaki Kondo, John Liu and Paul Panckhurst contributed to this story.