HONG KONG - Fears that the global recovery may lose steam weighed on Asian shares Wednesday as China moved to curb its credit boom and Wall Street's earnings season got off to a weak start.

Tokyo closed 1.32 percent lower as shares in stricken Japan Airlines tumbled 81 percent to just seven yen (eight US cents) on a flood of sell orders due to fears the carrier, which faces bankruptcy, will be delisted.

The Nikkei shed 144.11 points to 10,735.03. 'The selling is unstoppable,' said Hideaki Higashi, a strategist at SMBC Friend Securities.

Beijing's move to raise the amount of money banks must hold in reserves by 50 basis points sent Hong Kong shares tumbling 2.59 percent and Shanghai 3.09 percent, the heaviest falls so far this year for both bourses.

Hong Kong's Hang Seng Index closed down 578.04 points to 21,748.60 while the Shanghai Composite Index fell 101.31 points to 3,172.66

Beijing's decision followed a move to raise the yield on one-year Chinese government bills for the first time in five months, after last week's similar move on another benchmark sale, in a sign of tighter borrowing costs.

'Investors' sentiment was hurt by the sooner-than-expected reserve requirement ratio hike while concerns over further monetary tightening will make investors more cautious in the future,' Citic Securities analyst Yu Jun told Dow Jones Newswires.

Sydney lost 31.4 points, or 0.64 percent, to 4,868.10, led by resources as investors took fright at China's tightening moves.

'Anything from stocks to currencies exposed to China are being sold,' said IG Markets research analyst Ben Potter. 'The market wasn't expecting the measures so soon.'

Engineering and maintenance group WorleyParsons dropped 11.4 percent to 25.99 Australian dollars (24 US dollars) after lowering its 2010 full-year profit guidance.

Seoul's KOSPI closed down 27.23 points, or 1.60 percent, at 1,671.14 led by steelmakers, shipbuilders and brokerages on concerns China may soon raise interest rates.

Wall Street earlier provided a weak lead, where the Dow Jones index dropped 0.34 percent.

Traders mulled Monday's disappointing profit forecast from aluminium giant Alcoa, the first of the blue-chip US companies to release financial results.

A possible new US government fee or tax on financial institutions to help recoup taxpayer bailout funds also weighed on banks.

The dollar was mixed in Asian trade as China's policy moves sparked demand for the 'safe haven' greenback, dealers said.

The US unit gained to 91.11 yen in Tokyo afternoon trade from 91.01 in New York late Tuesday. The euro climbed to 1.4494 dollars from 1.4484 dollars and to 132.06 yen from 131.81.

In Singapore, crude continued to fall, from 15-month highs posted earlier this week, on prospects of softening fuel demand in the United States, the world's biggest oil consumer.

New York's main futures contract, light sweet crude for delivery in February, fell 70 cents to 80.09 dollars.

Brent North Sea crude for February delivery was down 61 cents to 78.69 dollars.

Hong Kong gold ended lower at 1,127.00-1,128.00 US dollars an ounce, down from Tuesday's close of 1,155.80-1,156.80 dollars.

In other markets:

-Singapore's Straits Times Index fell 0.95 percent, or 27.73 points, to 2,888.38.

Investor sentiment will be influenced by the financial results of major US banks next week and US retail data expected Thursday, dealers said.

-These will determine market movements for the next few weeks, if they disappoint it could trigger the long-awaited correction,' a dealer with a foreign brokerage said.

- Taipei closed down 112.81 points, or 1.36 percent, at 8,196.56 on concerns China may take further steps to prevent overheating, dealers said.

'It may take the market a day or two to digest the selling pressure,' said Mars Hsu of Grand Cathay Securities.

-Jakarta lost 1.00 percent, or 26.68 points, to 2,632.87.

- Kuala Lumpur fell 0.26 percent, or 3.34 points, to 1,289.51

- Manila closed 0.29 percent, or 8.92 points, down with the composite index ending at 3,096.70.

Top traded Philippine Long Distance Telephone shed 1.1 percent to 2,700 pesos.

- Wellington's NZX-50 index fell 0.43 percent, or 14.01 points, to 3,276.20.