Mumbai, Oct. 1 -- The ASX 200 fell 2.0% to 8,614 on Thursday, its biggest one-day decline since early March and its lowest level since mid-June. The drop ended a three-session winning streak.

Investor sentiment weakened as U.S. Treasury yields climbed, inflation remained sticky and concerns grew that the Reserve Bank of Australia could raise interest rates further. Analysts also warned that higher rates could put pressure on Australia's property market.

Australia's trade surplus also narrowed to a three-month low in August as imports grew faster than exports. Still, stronger U.S. stock futures helped limit some of the market's losses ahead of Friday's U.S. jobs data.

Selling was broad, with energy, mining, transport, logistics and fina...