* 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 shares at a 62-year low, Goldman Sachs seen posting a first-ever quarterly loss, and No. 2 U.S. electronics retailer Circuit City's 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."
The pan-European FTSEurofirst 300 stock index was down 3 percent, following a similar loss on Japan's Nikkei average.
Emerging market stocks as measured by MSCI 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 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.
Oil lost 4.5 percent to about $59.50 a barrel. Gold pared 1 percent to around $738 an ounce and London copper tumbled 4 percent.
Demand for commodities -- and hence their prices -- generally falls when economies slow.
DOLLAR RECOVERS
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 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.
The euro hit a record high against sterling of 82.14 pence, according to Reuters data while the pound fell 0.5 percent against the dollar at $1.5527.
The Japanese currency was down 0.1 percent against the dollar at 97.88 yen.
Euro zone government debt was mixed.
Two-year bond yields were flat at 2.396 percent, with 10-year yields 2 basis points higher at 3.694 percent. (Editing by Ron Askew)