BANGKOK: World stock markets retreated Wednesday as China's move to curb its torrent of bank lending spurred fears of slower economic recoveries in other countries.

Losses were heaviest in Hong Kong and mainland China while benchmarks in other Asian markets fell about 1.5 percent or less. Some major European bourses posted moderate losses and oil dropped to near $80 a barrel. The dollar was higher against the yen and a tad lower versus the euro.

Also restraining buying appetite was disappointing earnings from U.S. aluminum giant Alcoa Inc. which raised more questions about whether the 10-month surge in global stock markets can be sustained.

China's decision to raise the proportion of deposits that banks must hold in reserve — in effect tapping the brakes on lending — was a small first step toward reducing the massive stimulus provided to its economy, analysts said.

But the move reverberated around the world as investors worried that any slowdown in China — an important source of growth for exporters in Asia and elsewhere amid the downturn — would dent recovery prospects.

Analysts at DBS, the largest bank in Southeast Asia, said Chinese authorities were acting preemptively because they were concerned about the increasing risk of a bubble in the property market and inflation.

Yet they did not expect the Chinese central bank to raise benchmark interest rates until the third or fourth quarter of this year. "If China raise interest rates much sooner than the U.S. it will be very difficult to control the inflow of hot money into China," putting pressure on the Chinese currency to rise, they said in a report.

As trading to started in Europe, Britain's FTSE 100 was down 0.1 percent, France's CAC-40 was off less than 0.1 percent and Germany's DAX gained 0.1 percent. Futures pointed to modest gains in the U.S. on Wednesday. S&P futures added 1.8 points, or 0.2 percent, to 1,135.70.

Earlier in Asia, Japan's Nikkei 225 stock average fell 144.11, or 1.3 percent, at 10,735.03 — pressured by worries Chinese growth may cool and another dizzying nosedive by Japan Airlines.

Hong Kong's Hang Seng slid 578.04, or 2.6 percent, to 21,748.60 and in mainland China, the Shanghai benchmark tumbled 3.1 percent to 3,172.66.

Elsewhere, South Korea's Kospi shed 1.6 percent to 1,671.41, Singapore's index fell 0.8 percent and Australia's market retreated by 0.6 percent.

In Tokyo, shares of Japan Airlines dived 81 percent after a 45 percent nosedive the day before amid expectations a bankruptcy filing was imminent. Companies doing business in commodities and machinery fell hard on concerns about weaker demand from China. Construction equipment maker Komatsu Ltd. finished down 2.9 percent, Nippon Steel Corp. lost 3.3 percent and rival JFE Holdings Inc. shed 5 percent.

"A downturn in demand in China, which represents nearly 50 percent of global steel demand, is likely to hit Japan's steel industry, given the lackluster pace at which domestic demand is recovering," said Credit Suisse analyst Shinya Yamada in a report.

In the U.S. on Tuesday, the Dow Jones industrial average fell 36.73, or 0.3 percent, to 10,627.26. The S&P 500 index fell 10.76, or 0.9 percent, to 1,136.22, after advancing for the first six days of the year for the first time since 1987. The Nasdaq composite index fell 30.10, or 1.3 percent, to 2,282.31.

Oil prices lost more ground in Asia after a report showed an unexpected jump in U.S. inventories of distillates and gasoline. Benchmark crude for February delivery was down 62 cents to $80.17 a barrel in electronic trading on the New York Mercantile Exchange.

In currencies, the dollar rose to 91.34 yen from 90.99 yen. The euro rose to $1.4486 from $1.4482.