Asian stocks dropped on Wednesday as worries over the state of the global economy hit confidence and a soaring yen weighed on the Japanese market.

Tokyo was off 0.40 percent, Sydney lost 0.99 percent, Hong Kong dropped 0.97 percent and Shanghai fell 0.44 percent.

Demand took a hit after Federal Reserve Chairman Ben Bernanke warned there had been a "loss of momentum" in the already tepid US jobs market.

Two years into a slow and largely jobless recovery, Bernanke predicted employment and growth would eventually pick up, but that a recent soft patch needed to be carefully monitored and that stimulative policies were still necessary.

"Until we see a sustained period of stronger job creation, we cannot consider the recovery to be truly established," Bernanke told an audience in Atlanta, Georgia.

Reiterating a now all-too-familiar story of a recovery hobbled by a lack of new employment opportunities and a continued housing crisis, he told the audience that "the jobs situation remains far from normal".

Bernanke's comments came on top of a fifth straight day of losses on Wall Street, with the Dow Jones Industrial Average closing down 19.15 points, or 0.16 percent.

In Tokyo, bargain hunting for undervalued stocks was tempered by worries over the lack of positive direction in the economy both locally and globally and by the yen's strength.

Figures released on Wednesday showed Japan's current account surplus plunged 69.5 percent from a year earlier in April.

Although the drop was much smaller than falls of more than 80 percent forecast by economists, it was the smallest surplus for the month of April in 26 years.

The surplus in the current account -- the broadest measure of trade with the rest of the world -- fell to 405.6 billion yen ($5.0 billion) in April from 1.33 trillion yen a year earlier, official data showed.

The yen was at a one-month high against the US dollar in early trade at 79.84 yen, before dropping a shade to 79.90 yen in Tokyo morning trade, down from 80.05 yen in New York late Tuesday.

Meanwhile, the euro sagged to $1.4658 from $1.4688 and to 117.14 yen from 117.60 yen.

A strong yen makes life difficult for Japanese exporters, a key tranche of an economy struggling under the weight of the March 11 earthquake and tsunami, which knocked out supply chains and shuttered factories. (AFP)