TOKYO - ASIAN markets lost ground in early trade on Tuesday after US stocks fell overnight on concerns that the financial crisis is taking a heavy toll on corporate earnings.

China's massive economic stimulus plan failed to boost Wall Street on Monday amid more bad corporate news, including a US$24.5 billion (S$36.7 billion) loss at AIG that forced the US government to expand its bailout of the troubled insurer.

The latest bailout plan, in excess of more than US$150 billion, is the largest in US history.

Beijing on Sunday announced a US$586 billion package to help boost growth in Asia's second largest economy, has continued to see slowing growth over the past few months.

'The Chinese stimulus package failed to soothe worries about a global recession,' noted NAB Capital economist David de Garis in Sydney. 'While we've had some positive news, there is still plenty to worry about.'

In a fresh sign that the Chinese economy is cooling, inflation hit a 17-month low of 4.0 per cent in October, down from 4.6 per cent the previous month, official figures showed.

Japan said its current account surplus nearly halved in September from a year earlier amid slack export growth and high energy import costs.

And worries about the financial health of General Motors grew after its shares plunged more than 30 per cent on Monday as an analyst at Deutsche Bank said they could be worthless within 12 months. The Dow Jones fell 0.82 percent.

GM chief executive Rick Wagoner said the Detroit giant was in such dire financial straits that it needed to line up a federal aid package before president-elect Barack Obama takes office in January.

'This is an issue that needs to be addressed urgently,' Mr Wagoner told Automotive News.

Mortgage finance giant Fannie Mae said it lost nearly US$29 billion in the third quarter and US electronics retailer Circuit City filed for bankruptcy protection.

The mood was glum at the world's biggest gathering of central bankers in Sao Paulo.

'We are certainly facing global financial turbulences that are intense and that have intensified,' said Mr Jean-Claude Trichet, head of the European Central Bank. 'We are not in the same situation.'

But Mr Dariusz Kowalczyk, chief investment strategist at CFC Seymour in Hong Kong, said the central bankers did not appear to be taking the threat of deflation seriously enough.

'It seems policy makers are still not fully aware of the depth of the recession the world has entered, which risks making their response inadequate,' he warned.

There was also bad news in Europe. German logistics giant Deutsche Post said on Monday it would cut 9,600 posts as part of restructuring of the loss-making DHL express mail delivery activities in the United States.

Telecoms giant Telekom Austria, which is 27.37-per cent owned by the state, confirmed that it would cut 2,500 jobs out of its 11,400 positions in Austria in the next few years, following a drop in income.

Recession fears meanwhile deepened in Italy with figures showing industrial output slumped 2.1 per cent in September from August, the biggest single-month drop in a decade. Figures also showed industrial production in France falling by 0.5 per cent in a month.

SHANGHAI
Chinese shares edged lower on Tuesday amid losses in other Asian markets and profit taking in local bourses after a 7.3 per cent surge in the previous session, dealers said.

The benchmark Shanghai Composite Index, which covers A and B shares, was down 16.19 points or 0.86 per cent to 1,858.61.

The Shanghai A-share index was down 17.04 points, or 0.87 per cent, to 1,952.40, while the Shenzhen A-share index shed 0.20 points, or 0.04 per cent, to 522.46.

HONG KONG
Hong Kong share prices opened 2.9 per cent lower on Tuesday, matching drops on other Asian markets after more bad economic and corporate news from the United States, dealers said.

The benchmark Hang Seng Index opened down 421.68 points at 14,322.95.

TOKYO
Japan's Nikkei stock index dropped 3.30 per cent by the end of morning trade on Tuesday after US shares lost ground overnight on worries about weak corporate earnings.

The benchmark dropped 299.98 points to 8,781.45 by the lunch break, after the Dow Jones slipped 0.82 per cent on Monday and the yen strengthened.