Economy fears dog Asia stocks as yen edges up

By Eric Burroughs

HONG KONG (Reuters) - Asian stock markets and oil prices retreated on Tuesday while the yen pushed higher as a souring economic outlook cooled investor hopes sparked by China's massive stimulus plan.

Stocks pulled back after shares of General Motors (GM.N) sank to a 62-year low and brokerages forecast that Goldman Sachs (GS.N) will post its first-ever quarterly loss, stirring worries about the earnings damage to come as the global economy faces a recession.

The bankruptcy of No. 2 U.S. electronics retailer Circuit City (CCTYQ.PK) also cast a shadow over equities.

European shares were set to drop about 1.5 percent, following the losses in Asia and on Wall Street, financial bookmakers said.

China's nearly $600 billion (383 billion pounds) package, along with expectations U.S. President-elect Barack Obama will push for more fiscal spending to revive the economy, spurred investor risk-taking on Monday.

"We're still getting pretty weak economic data, and I don't think that's going to change anytime soon," said Sean Darby, chief Asia strategist at Nomura in Hong Kong.

Darby said that investor conviction remains low and many market players were not seeing strong reasons to pick up battered shares yet.

The MSCI Asia ex-Japan .MIAPJ0000PUS fell 3 percent but is still up about 24 percent from the low struck in October when investors dumped assets across the board to raise cash, hitting higher-yielding currencies and commodities as well.