* Economy worries hit markets, China bounce fizzles
* European stocks down 3 percent, Japan down 3 percent
* Wall Street set for losses
* Dollar recovers, commodities slide, oil off 4.5 percent
(Updates, adds Wall Street outlook)
By Jeremy Gaunt, European Investment Correspondent
LONDON, Nov 11 (Reuters) - Economic gloom overpowered financial markets again on Tuesday, sending stock and commodity prices sharply lower as ebullience about China’s $600 billion stimulus plan fizzled out.
Wall Street looked set for losses at the open.
Bad news from corporate America -- General Motors GM.N shares at a 62-year low, Goldman Sachs GS.N seen posting a first-ever quarterly loss, and No. 2 U.S. electronics retailer Circuit City's CC.N bankruptcy protection filing -- overwhelmed any optimism.
The dollar turned slightly higher despite a short-lived bounce for the euro from an improvement in German economic sentiment.
“The support we saw in the early part of yesterday’s session off the back of the Chinese economic stimulus plan is looking to have been rather short lived,” Matt Buckland, dealer at CMC Markets, wrote in a note.
“Worrying corporate news from the U.S. plus suggestions that the recession will be longer and deeper than previously thought are adding to the downside.”
Emerging market stocks as measured by MSCI .MSCIEF lost around 3.8 percent, taking that index into negative territory in what would be the sixth month in a row for losses.
The emerging market index has lost nearly 55 percent of its value so far this year while its developed market counterpart .MIW00000PUS has lost around 42 percent.
The worries about economic and corporate growth also spread to commodities, which had rallied strongly on Monday because of the Chinese stimulus package.
Demand for commodities -- and hence their prices -- generally falls when economies slow.
The dollar and yen were broadly supported on the weak tone in equity prices.
The euro was down 0.2 percent against the dollar at $1.2707 <EUR=, its gains from a better-than-expected reading in a key German indicator survey ECON erased as the single currency was weighed down by weakness in European share prices.
“There is still the risk aversion factor which is supporting the dollar and yen but it is not quite as much as before, as currencies are settling into ranges,” said Daragh Maher, currency strategist at Calyon in London.
The ZEW Institute’s index of German economic sentiment came in at -53.5 in November, improving from -63.0 in October. It also beat market expectations for a reading of -62.0 [nBAE001468].
The Japanese currency was down 0.1 percent against the dollar JPY= at 97.88 yen.
Euro zone government debt was mixed.