Asian stocks sold off heavily in Thursday's trading, with indices suffering their worst collective one-day decline since August, prompted by heavy selling in financials.

China's Shanghai Composite Index plunged 271 points, or 4.85%, to 5330, while in Hong Kong the Hang Seng tumbled 948 points, or 3.19%, to 28,760.

In Japan, the Nikkei slipped 325 points, or 2.02%, to 15,771, while the Topix shed 40 points, or 2.5%, to 1516. The Korean Kospi, which has been surging in recent weeks on Chinese bargain hunting, plummeted 63 points, or 3.11%, to 1979.

"On a global basis there's no way in denying it -- multiples look extremely elevated, but also if you're trying to take a long-term view, while all the fundamentals seem right I find it's very hard to buy these stocks," says Jeroen Knol, a fund manager for ABN Amro. "I still have positions in financials in China but mainly I've been trimming them on the way with every new high."

Shares in China Life Insurance ( LFC) lost 3.93% in Hong Kong, to HK$45.25, while in Shanghai the shares sank 6.5%, to 61.23 yuan. Other financials fared similarly. HSBC Holdings ( HBC) lost 1.93%, to HK$142.40, while CITIC Bank lost 5.7%, to HK$5.62.

On other Asian financials, Japanese bank Mitsubishi UFJ ( MTU) dived 3.2%, to 966 yen, while Korean Kookmin Bank ( KB) slipped 2.34%, to 66,900 won.

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