Positive market sentiment following bold government moves to stem the financial sector¹ meltdown evaporated yesterday and recession fears rose to the fore², sending shares slipping around the world after a two-day rally.

In Asia, the Chinese mainland's benchmark Shanghai Composite Index declined by 22.65 points, or 1.12 percent, to 1,994.67, while the smaller Shenzhen Composite Index shed 4.92 percent to close at 524.70.

Hong Kong's Hang Seng Index lost 843 points, or 5 percent, to 15,990 after rising more than 13 percent the previous two days.

Markets in Australia, South Korea, and Singapore were also lower.

Japan's Nikkei 225 index bucked³ the trend, however, paring its losses to end higher up 1.1 percent. The benchmark surged 14 percent in the previous session - its biggest single-day gain.

The FTS Eurofirst 300 index of top European companies was down 2.7 percent in early trading, after gaining a record 10 percent on Monday and 3 percent on Tuesday.

The Dow Jones industrial average was down about 158 points, or 1.7 percent, at the 9,152 level in early trading after economic readings raised the possibility that the US is either in a recession or moving toward one.

Recession fears returned after trillions of dollars pledged for bank bailouts from Europe to Asia helped allay⁴ fears of an imminent⁵ financial meltdown.

"We are not quite out of the forest, but at least the trees have stopped collapsing⁶ on us," said Henk Potts, equity⁷ strategist at Barclays Wealth.

"Investors⁸ are starting to realize that a systemic meltdown of the financial sector is less likely, but worries have shifted to macroeconomic concerns as many Western countries have glum⁹ 2009 GDP forecasts," he said.

EU leaders will meet in Brussels just days after stumping¹⁰ up 2.2 trillion euros ($3 trillion) to rescue European banks and jolt¹¹ frozen money markets - at the heart of the worst financial crisis since the Great Depression - into life.

European leaders will press for an overhaul¹² of the world's financial structures after Asia joined Western bastions of capitalism¹³ in bailing¹⁴ out banks to avert¹⁵ a financial meltdown.

Southeast Asian nations backed by Japan, South Korea, China and the World Bank were the latest to join the global rescue effort, agreeing yesterday to create a multi-billion dollar fund to buy bad debt and help banks. The World Bank committed $10 billion for the fund.

But concerns remained that the rescue would come at a huge economic cost and do little to repair the damage already done by a 14-month credit crunch¹⁶, which has slowed the economy.

As the markets dropped, regional leaders continued to grapple with the financial crisis and its impact on local economies.

A day after announcing billions in new spending to protect Australia's economy, Prime Minister Kevin Rudd accused Wall Street of "obscene failures" in corporate¹⁷ governance and blamed "extreme capitalism" for the turmoil¹⁸.