Local shares headed south yesterday after overnight losses on Wall Street and lacklustre data on China's industrial production and retail sales.

The declines on Wall Street - the Dow led the way, falling 0.8 per cent - came despite inflation pressures easing in the United States.

But investors here were in no mood to take the optimistic view and sent the Straits Times Index (STI) down 0.7 per cent or 21.76 points to close at 3,058.61.

Losers well outgunned gainers 298 to 196, with 1.43 billion shares worth $1 billion changing hands.

Oanda senior market analyst Jeffrey Halley said: "China's data dump contained some unpleasant surprises, as each release missed expectations, darkening the mood across Asia. The expectations of government largesse may be limiting the fallout in China equities.

"But with sectoral clampdowns, the Evergrande saga, and withering consumer confidence, the downward repricing of China equities could be far from over."

Hongkong Land, the worst performer on the STI on Tuesday, clawed back some of its losses yesterday. The counter was the top gainer, up 1.1 per cent at US$4.68.

Jardine Matheson Holdings was at the bottom of the table, closing 2.3 per cent lower at US$52.77.

The most heavily traded counter on the index was Genting Singapore, with 24.8 million shares changing hands. The stock fell 1.3 per cent to 76.5 cents.

This came after Macau officials unveiled plans to tighten their grip on casino operators. The crackdown sent the Hang Seng Index sinking 1.8 per cent.

Most Asian markets closed lower following the weak China data and the Wall Street fall. The Nikkei 225 index slid 0.5 per cent; the Jakarta Composite Index, 0.3 per cent; and the FTSE Bursa Malaysia KLCI, 0.02 per cent.

Australian shares closed down 0.3 per cent after falling as much as 0.8 per cent earlier in the session.