By Ian Chua SYDNEY (Reuters) - Asian stocks stumbled to their lowest in five weeks on Monday after a batch of weak data out of China raised the spectre of a sharp slowdown in the world's second-biggest economy. The Australian dollar, considered a liquid proxy for China plays, also took a hammering and slumped to a six-month low. MSCI's broadest index of Asia-Pacific shares outside Japan dipped 0.8 percent to levels last seen on Aug. 8. The index has fallen almost 4 percent in a little over a week, from a near seven-year peak. Australia's S&P/ASX 200 index shed 0.7 percent, South Korea's KOSPI fell 0.3 percent and Hong Kong's Hang Seng slid 1.1 percent. Mainland Chinese shares were 0.6 percent lower. Japanese financial markets were shut on Monday for a public holiday. Data released on Saturday showed China's factory output grew at the weakest pace in nearly six years in August, while growth in other key sectors also cooled. "This confirms a slowdown in growth momentum in Q3 following the Q2 rebound," analysts at Barclays wrote in a note to clients, adding they have cut their 2014 growth forecast for China to 7.2 percent from 7.4 percent. "Notably, it comes just after recent remarks by Premier Li that the government was comfortable with the current pace of growth, that its focus was on employment instead, and that it would maintain 'prudent' policies." Indeed, there are worries that Beijing may be reluctant to provide additional stimulus for now, although many suspect the Chinese authorities will be forced to do should growth threaten to undershoot the official 7.5 percent target significantly. The bearish Chinese data has added to worries about a 40-percent slide in iron ore prices this year and further soured sentiment for commodity currencies. Not surprisingly, the Australian dollar came in the cross hairs of sellers, briefly dipping below 90 U.S. cents and extending a decline from 94 cents early this month. The other major currencies were steadier with the U.S. dollar holding just below a six-year peak of 107.39 yen set on Friday. The euro was flat at $1.2968, having last week slumped to a 14-month trough of $1.2859. There has been strong demand for the greenback as investors positioned for a slightly more hawkish shift from the Federal Reserve this week at its Sept. 16-17 policy meeting. This has driven U.S. Treasury yields higher, with the 10-year popping above 2.6 percent on Friday in its biggest weekly rise in over a year. "The key question surrounding this week's policy event is whether a widely expected change in FOMC forward guidance is sufficient to re-fuel USD buying," Credit Agricole analysts wrote in a report. "Having witnessed an already large shift in USD positioning... our answer is no. Indeed while we forecast USD strength to continue throughout Q4, USD demand appears to have gotten ahead of itself with longs (temporarily) over-extended." Sterling remained on tenterhooks just days out to the Sept. 18 referendum on independence for Scotland, with polls showing both "Yes" and "No" camps pretty much running neck and neck. A win for the "Yes" campaign could result in the end of the 307-year-old union with England and the break-up of the United Kingdom. The pound last traded at $1.6244, but remained vulnerable after skidding to a near 10-month low of $1.6052 last week. Broad U.S. dollar strength coupled with worries about demand knocked crude oil prices lower. U.S. crude fell $1.20 to $91.16 a barrel. Copper shed 0.7 percent to $6,787.25 a tonne, while gold reached its lowest in eight months at $1,225.30 an ounce. (Editing by Shri Navaratnam)