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asian-stockHONG KONG: Asian markets tumbled in early trade on Tuesday after ratings agency Moody's warned France it may lower its credit rating, while Germany cast doubt on a plan to fix the eurozone's debt crisis.

Investors also reacted to the release of Chinese economic data which showed third-quarter gross domestic product growth slowed to 9.1 percent, and factory output growth fell slightly in the first nine months of the year.

The figures would likely stoke concerns that a slowdown in orders from the US and Europe was denting the world's second-biggest economy, as Beijing also works to fight stubbornly high inflation.

Tokyo lost 1.54 percent by the break, Hong Kong was 3.31 percent lower, Sydney dropped 1.83 percent and Seoul's benchmark index was off 1.50 percent. Shanghai lost 0.87 percent in early trade.

The broad drop across the major regional stock markets reversed an Asian rally Monday largely driven by a weekend meeting where Europe vowed to its G20 partners to take swift and decisive action on tackling its debt crisis.

European and US markets lost ground Monday amid warnings from Germany against putting too much hope that an EU summit this weekend will produce a comprehensive solution to Europe's fiscal woes.

Berlin sought to dampen expectations for Sunday's European Union summit in Brussels, with government spokesman Stefan Seibert warning that "dreams that everything will be resolved and dealt with by next Monday cannot be fulfilled".

Finance Minister Wolfgang Schaeuble said that decisions would be part of "important measures to be taken over the long term, and this long term is likely to last into next year."

The tone was a marked change from the weekend when, speaking after a meeting of G20 finance ministers and central bankers in Paris, French Finance Minister Francois Baroin said the eurozone answers at the summit would be "decisive".

Ric Spooner, chief market analyst at CMC Markets in Sydney, said the latest news from Europe was "another indication of the political obstacles to forging a workable solution for the eurozone".

"Investors have been reminded of the need for caution until details of any proposal are formally released and agreed on," he told Dow Jones Newswires.

The market was also spooked by Ratings agency Moody's warning to France that it may place a negative outlook on its cherished Aaa credit rating in the coming months, saying the government's financial strength "has weakened".

The annual credit report is a shot across the bow for the second-largest economy in the eurozone, which currently enjoys the top credit rating from Moody's and rival ratings agencies.

The warning comes just days after Standard and Poor's downgraded Spain's credit rating, citing sky-high private debt, weak economic growth and towering unemployment.

The euro edged up to $1.3777 in Tokyo trade from $1.3734 in New York late Monday. The European single currency edged up to 105.87 yen from 105.51 yen.

The dollar stood at 76.84 yen, almost flat from 76.82 yen.

New York's main oil contract, light sweet crude for delivery in November, was down nine cents to $86.29 per barrel, and Brent North Sea crude for December delivery dipped 22 cents to $109.94.

By 0300 GMT, gold was at $1,671.25 an ounce, compared with $1,684.73 at 1100 GMT Monday.

Copyright AFP (Agence France-Presse), 2011

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