Asian stock markets retreated Tuesday as China"s warning to banks to control their lavish lending underlined the risks to an economic recovery driven by easy credit. European shares were lower, AP reported. Asia also got a poor cue from Japan, where stocks fell on pessimism about the strength of the world"s No. 2 economy. Gold retreated from a record and oil prices slipped to near $77. Investors shrugged off Wall Street ending a three-day losing streak Monday and figures showing that U.S. home sales rose 10 percent in October. News that China"s central bank was warning banks to control a lending spree underscored there are limits to the easy credit which has underpinned Asia"s rapid recovery from the global recession. «The central bank has been concerned about lending to the property sector,» said Francis Lun, general manager of Fulbright Securities Ltd. in Hong Kong. «If they can put on the brakes to avoid an asset bubble it is likely to be better for the longer term,» he said. China"s Shanghai index tumbled 115.14, or 3.5 percent, to 3,223.53 as investors fretted the central bank"s warning _ which comes ahead of the government"s annual economic planning meeting _ could foreshadow more measures to reduce liquidity. The index had been up 11.4 percent so far this month. In Hong Kong, the Hang Seng index slid 348.25, or 1.5 percent, to 22,423.14 on weakness in Chinese financial stocks. Bank of China slumped 4 percent. Japan"s Nikkei 225 stock average dropped 96.10, or 1 percent, to a fresh four-month low of 9,401.58. «Investors are becoming pessimistic about Japan"s economy. They are frustrated and very disappointed the government has not been able to launch measures to spur the economy,» said Masatoshi Sato, a market analyst at Mizuho Investors Securities Co. Ltd. Besides doubts about the economy, sentiment was also hurt by a strong yen, which pressures Japanese exporters by eroding their overseas profits. Among Japanese blue chips, Japan Airlines Corp. tumbled 8.4 percent to a record low amid worries over a possible bankruptcy. Toyota Motor Corp. _ the world"s No. 1 automaker _ declined 1.7 percent. Elsewhere, South Korea"s Kospi dropped 0.8 percent to 1,606.42 and Australia"s S&P/ASX 200 index declined 0.7 percent to 4,685 on losses in banks and miners. Markets in India, Singapore and Thailand also fell. Major indexes in Britain, Germany and France were down 0.6 percent or more in early European trade.