Asian stock markets fell sharply Tuesday, following Wall Street lower as economic fears sapped enthusiasm over China's nearly $600 billion package to boost growth. European markets also opened lower.

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

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

The lackluster trade was a turnaround from Monday, when investors piled into stocks on hopes that China's 4 trillion yuan ($586 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," 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 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. Shares of GM, which announced a $2.5 billion third-quarter loss on Friday, plunged 23 percent 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 percent in early trading. In Russia, trading was halted on the ruble-denominated MICEX after the index dropped 6.5 percent.

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. 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. Dow futures were down 59 points, or 0.7 percent, at 8,828.

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.

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

In Hong Kong trade, shares of HSBC Holdings PLC slid 4.8 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 $1.80 to $60.61 in Asian trade. Overnight, the contract settled at $62.41 a barrel on the New York Mercantile Exchange.

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