Markets slumped Monday after a U.S. Federal Reserve official suggested a September interest rate hike still was possible and weak Japanese factory activity provided more evidence of a sluggish global economy.

KEEPING SCORE: Dow Jones futures slumped 170 points and the Standard & Poor’s 500 gave up 20. In Europe, France’s CAC-40 fell 0.9 percent to 4,632.59 and Germany’s DAX lost 0.9 percent to 10,211.13. The U.K. was closed for a holiday. Wall Street looked set for losses at the open.

FED PLANS: The Fed vice chairman, Stanley Fisher said there was a “pretty strong case” for raising rates in September. That ran counter to recent market sentiment that China’s economic slowdown and global market volatility might prompt the Fed to wait. Speaking at the U.S. central bank’s annual gathering in Jackson Hole, Wyoming, Fisher emphasized he was not saying what action the Fed might take at its September meeting but analysts took his comments to mean he saw the economy moving close to satisfying the Fed’s conditions for a hike. It would be the Fed’s first reverse from its policy in place since the 2008 crisis of ultra-low rates that have pushed up stock prices.

ANALYST’S TAKE: “The Fed is still at the drawing board with regards to the specifics of the timing of a rate hike this year. But to be sure conviction for a hike this year was not watered down,” said analysts from Mizuho Bank in a report. “What’s more, a rate hike sooner rather than later is preferred on forward-looking inflation.”

ASIA’S DAY: The Shanghai Composite Index was down by as much as 2.6 percent during the day but recovered to close 0.8 percent lower at 3,205.99. The index is down more than 30 percent over the past three months despite government efforts to halt its tumble. Hong Kong’s Hang Seng also spent most of the day in negative territory before closing up 0.3 percent at 21,670.58. Tokyo’s Nikkei 225 lost 1.3 percent to 18,890.48 and Sydney’s S&P ASX 200 lost 1.1 percent to 5,207.00. India’s Sensex shed 0.3 percent to 26,316.54 and Seoul’s Kospi advanced 0.2 percent to 1,941.49. Taiwan, Bangkok and Jakarta rose while Singapore and New Zealand fell.

SLUGGISH DATA: Japan’s industrial production declined unexpectedly by 0.6 percent in July from the previous month, defying forecasts of a small increase. “The drop in industrial production in July suggests that economic activity will recover only slowly this quarter,” said analyst Marcel Thieliant of Capital Economics in a report.

In Europe, official figures showed the annual inflation rate remained at a weak 0.2 percent in the 19-country eurozone. The figure was broadly expected but underlines the challenges facing the European Central Bank in bringing inflation back toward its 2 percent target.

ENERGY: Benchmark U.S. crude declined $1.22 cents to $44 per barrel in electronic trading on the New York Mercantile Exchange. After a two-month decline, crude gained last week but appears ready to lose more ground.

CURRENCIES: The dollar declined to 121.36 yen from 121.38 yen on Friday. The euro rose to $1.1204 from $1.1180.

(AP)