BENGALURU: Asian stocks slid on Thursday as prospects of interest rate hikes sullied global investor sentiment ahead of policy meeting by the European Central Bank (ECB), while a rally in oil prices rekindled fears of inflation and economic slowdown.

       The ECB will meet later in the day and markets expect the lender to put an end to its bond-buying programme this month. Its U.S. counterpart is widely expected to hike interest rates by 50 basis points next week.

       "Although no rate hike is expected from the ECB, an earlier-than-expected move to raise rate by 25bps should not be ruled out given that May consumer prices rose to a record high," Maybank analysts said in a note.

       Stocks in emerging markets dipped after Wall Street suffered overnight losses.

       The Philippines' stocks fell 1% to mark their biggest drop in a week, followed by a 0.8% and 0.7% drop in Indonesian and Malaysian equities, respectively.

       Chinese shares lost 0.8% as parts of Shanghai began imposing new Covid-19 restrictions in an effort to control coronavirus transmission risks.

       The Bank of Japan remains one of the few global central banks to maintain a dovish stance while others have adopted tightening policies of hiking interest rates to combat inflation.

       Central banks in Asia also have started to raise interest rates to curb red-hot inflation. India's central bank was the latest to hike interest rates by 50 bps on Wednesday, while the Bank of Thailand (BOT) stood pat on interest rates but opened the possibility for imminent rate hikes.

       "We think the BOT's policy normalisation in the second half of this year is highly likely. A 25-bps policy rate hike could come as soon as in the next meeting in August given inflation concerns," DBS analysts wrote in a note.

       While the Indonesian rupiah shed 0.4%, some currencies such as the baht, the Singaporean dollar and the ringgit recouped losses to edge higher.

       Oil prices rose on robust demand from top consumer U.S. while demand recovery in China also aided the sentiment.

       The rise in oil prices comes despite the OPEC+'s decision to raise output in order to meet global demand.

       Efforts by OPEC+ oil producers to boost output are "not encouraging," UAE energy minister Suhail al-Mazrouei said on Wednesday, noting the group was currently 2.6 million barrels per day (bpd) short of its target.

       Bank Indonesia (BI) is the only other central bank in Southeast Asia to maintain a dovish stance as it seeks to support economic recovery.

       "Inflation still remains within BI's target range. There is ample room for BI to maintain its policy rate as domestic inflation is expected to decrease seasonally in the coming months," said Rully Wisnubroto, Senior economist at Mirae Asset Sekuritas Indonesia.

       HIGHLIGHTS:

       ** China's exports surge on easing Covid curbs, trade outlook still fragile

       ** Shanghai's Minhang district announces new lockdown measures to control Covid-19 transmission risks