Asia stocks lackluster, China stimulus hopes wane

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Most Asian stock markets retreated Tuesday after weakness on Wall Street, as concerns about the global economy sapped enthusiasm over China's nearly $600 billion package to boost growth.

Tokyo's Nikkei 225 index was down 272.13 points, or 3 percent, to 8,809.30 as the yen strengthened against the dollar. In Hong Kong, the Hang Seng benchmark was 2.2 percent lower at 14,407.45 points.

Australia's benchmark fell 3.6 percent. Markets in Singapore, South Korea and India also declined.

The Shanghai Composite index, up earlier in the session, fell 1.5 percent despite figures showing the country's inflation rate eased further last month.

Regional equities were up sharply Monday on hopes that China's 4 trillion yuan ($586 billion) stimulus package, announced Sunday, would keep its economic growth from falling too fast and help fuel demand for exports from other Asian countries.

But the rally proved short lived amid fresh evidence of more economic troubles.

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

In Asia, Japan's government reported the country's current account surplus in September plunged almost 50 percent from a year earlier as export growth waned in the face of a global slowdown.

"It's what I'd term a 'fally:' a rally based on fallacy," 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."

Wall Street's lower finish weighed on the markets. The Dow fell 73.27, or 0.8 percent, to 8,870.54 overnight, after rising by 215 points in early trading and tumbling by as many as 183.

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

With U.S. index futures down, Wall Street was poised to open lower.

In China, the government reported that consumer prices rose by 4 percent in October from a year earlier, down from September's 4.3 percent rate and February's 12-year high of 8.7 percent. The news was seen as positive because it could give Beijing leeway to loosen credit policies.

Steel and property shares advanced in mainland trade, amid hopes that the stimulus package would generate stronger demand and new construction projects.

In Hong Kong trade, shares of HSBC Holdings PLC slid 1.5 percent after the bank, Europe's largest by market value, announced $4.9 billion in writedowns for the third quarter, as bad loans in the U.S. 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 $1.55 to $60.86 in Asian trade. Overnight, the contract settled at $62.41 a barrel on the New York Mercantile Exchange.

In currencies, the dollar weakened to 97.88 yen, down from 97.8, and traded at 1.2713 against the euro.

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AP Business Writers Joe McDonald in Beijing and Elaine Kurtenbach in Shanghai contributed to this report.

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