Asian markets hit by weak corporate news

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 24.5 billion dollar 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 $150bn, is the largest in US history.

Tokyo's Nikkei index dropped 3.3% by lunch. Hong Kong share prices opened 2.9% lower while Australian stocks fell 4.3% in morning trade, a day after rising on news of China's fiscal stimulus plan.

Beijing on Sunday announced a $586bn 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% in October, down from 4.6% 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% on Monday as an analyst at Deutsche Bank said they could be worthless within 12 months. The Dow Jones fell 0.82%.

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," Wagoner told Automotive News.

Mortgage finance giant Fannie Mae said it lost nearly $29bn 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 Jean-Claude Trichet, head of the European Central Bank. "We are not in the same situation."

But 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 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-percent 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% in September from August, the biggest single-month drop in a decade. Figures also showed industrial production in France falling by 0.5% in a month.