HONG KONG - ASIAN stock markets fell sharply on Tuesday, following Wall Street lower as economic fears sapped enthusiasm over China's nearly US$600 billion (S$900 billion) package to boost growth. European markets also opened lower.

Tokyo's Nikkei 225 index dropped 272.13 points, or 3 per cent, to 8,809.30 as the yen strengthened against the US dollar. In Hong Kong, the Hang Seng benchmark lost 703.73 points, or 4.8 per cent, to 14,040.90.

The Shanghai Composite index, up earlier in the session, fell 1.7 per cent to 1,843.61 despite new figures showing the country's inflation rate eased further last month. Australia's index tumbled 3.6 per cent and India's Sensex fell 5 per cent, with markets in Singapore, Taiwan and South Korea were also hit with heavy selling.

The lacklustre trade was a turnaround from Monday, when investors piled into stocks on hopes that China's 4 trillion yuan (S$878 billion) stimulus package would keep its economic growth from falling too fast.

There was also the belief that it could sustain China's appetite for commodities and other goods exported from other Asian countries, helping making up for sinking demand from Western buyers.

As with most rallies in recent months, Monday's proved short lived, as investors confronted new evidence of the global slowdown.

'It's what I'd term a 'fally:' a rally based on fallacy,' Mr Kirby Daley, senior strategist at Newedge Group in Hong Kong, said of Monday's advance. 'The fallacy being that the China stimulus package is the answer to all of Asia's problems. While it will help and is a step in the right direction, it will not fully insulate Asia from feeling the impact of the global downturn.'

In the US, major electronics retailer Circuit City Stores filed for bankruptcy protection. Investors also speculated about the fate of General Motors, Chrysler and Ford Motor after the automakers met with lawmakers last week in hopes of securing financial help.

Shares of GM, which announced a US$2.5 billion third-quarter loss on Friday, plunged 23 per cent overnight to levels unseen since after World War II.

European markets joined the retreat, as benchmarks in Britain, Germany and Frances slid more than 1 per cent in early trading. In Russia, trading was halted on the ruble-denominated MICEX after the index dropped 6.5 per cent.

Wall Street's lower finish weighed on the markets. The Dow fell 73.27, or 0.8 per cent, to 8,870.54 overnight, after rising by 215 points in early trading.

Broader indexes also ended lower, with the Standard & Poor's 500 index retreating 1.3 per cent to 919.21, and the Nasdaq composite index falling 1.9 per cent to 1,616.74.

With U.S. index futures down, Wall Street was poised to open lower. Dow futures were down 59 points, or 0.7 per cent, at 8,828.

In China, the government reported that consumer prices rose by 4 per cent in October from a year earlier, down from September's 4.3 per cent rate and February's 12-year high of 8.7 per cent.

The news was seen as positive because it could give Beijing leeway to loosen credit policies.

Major Japanese exporters fell victim to the bearish mood and stronger yen. Toyota Motor shed 4.9 per cent, Canon slid 8.4 per cent, and Panasonic was off 5.7 per cent to 1,487 yen.

In Hong Kong trade, shares of HSBC Holdings slid 4.8 per cent after the bank, Europe's largest by market value, announced US$4.9 billion in writedowns for the third quarter, as bad loans in the US continued to mount and the credit market faltered.

Oil prices, following a recent pattern, swung lower along with stocks. A barrel of light, sweet crude for December delivery dropped US$1.80 to US$60.61 in Asian trade. Overnight, the contract settled at US$62.41 a barrel on the New York Mercantile Exchange.

In currencies, the US dollar weakened to 97.78 yen, down from 97.98, and traded at US$1.2779 against the euro.

SHANGHAI
Chinese share prices closed down 1.66 per cent on Tuesday weighed by weak performances in other Asian markets and profit taking in local bourses after a surge in the previous session, dealers said.

The benchmark Shanghai Composite Index, which covers A and B shares, closed down 31.19 points to 1,843.61 on turnover of 56.7 billion yuan (S$12.4 billion).

The Shanghai A-share index fell 32.72 points, or 1.66 per cent, to 1,936.72 on turnover of 56.5 billion yuan, while the Shenzhen A-share index shed 2.88 points, or 0.55 per cent, to 519.78 on turnover of 26.3 billion yuan.

HONG KONG
Hong Kong share prices closed 4.8 per cent lower on Tuesday, as poor corporate and economic figures from the United States battered Asian markets, dealers said.

The benchmark Hang Seng Index closed down 703.73 points at 14,040.90.

Turnover was 54.38 billion Hong Kong dollars (S$10.5 billion).

TOKYO
Japanese share prices retreated on Monday, pushed back by worries about weak corporate earnings and a stronger yen.

The benchmark Nikkei-225 index dropped 272.13 points, or 3.0 per cent, to end at 8,809.30.

The Topix index of all first section issues fell 27.29 points, or 2.98 per cent, to 889.36.

KUALA LUMPUR
Malaysian share prices closed 1.0 per cent lower on Tuesday in line with other Asian markets after a fall on Wall Street, dealers said.

The Kuala Lumpur Composite Index shed 9.64 points to close at 894.60 on turnover of 1.1 billion shares worth 965 million ringgit (S$403 million) with losers leading gainers 367 to 192 and 196 counters unchanged.

Dealers said the bourse was weighed down by profit taking in plantations, finance, and index heavyweights.

They said rotational plays also retreated with retail and short-term investors selling into strength in the absence of positive leads.

'The benchmark's failure to close above 900 (the psychological resistance) is bearish. Downside risk is higher as profit-taking is beginning to emerge in lower-liners and penny stocks as well', a dealer told Dow Jones Newswires.

They expect the benchmark index to trade within the 880-910 range on Wednesday, with a downside bias.

Among decliners, Zelan was down 7.4 per cent at 1.25 ringgit, Tenaga Nasional shed 3.2 per cent at 6.05 ringgit while plantation company KL Kepong lost 1.8 per cent at 8.25 ringgit.

Among gainers MBSB added 11.1 per cent at 90 sen and Boustead was up 6.9 per cent at 69.5 sen. -- AFP, THOMSON REUTERS, AP