Resource stocks tumbled in Asia on Tuesday as oil and metals prices retreated amid more US economic gloom and signs of deceleration in China that added to fears about a global slowdown.

The high-flying sector was hit by selling from investors who had formerly poured cash into commodities and related companies as a hedge against US dollar weakness and rising inflation, analysts and fund managers said.

Among the heaviest losers were global miners BHP Billiton and Rio Tinto, which both lost more than 5.5 percent, leading Australia's mining index down 6.3 percent. On Monday, the UK mining index shed 3.5 percent.

"You've got an economic slowdown and markets are slowly coming to terms with it. Some of the speculation that was looking for safe harbour in commodities is starting to unwind," said Mark Konyn, chief executive of Allianz SE's RCM Asia Pacific arm, which manages about $15 billion.

"Our longer-term view is still for a structural uptrend, because we don't see the demand easing at all and we still see some supply side constraints."    

Investors have relied for months on China's boom supporting prices for oil, copper, aluminium and steel, even as the US economy has suffered a housing crisis that has taken it to the brink of recession. Richer households in China and India have also contributed to a sharp rise in food prices.

But copper hit a six-month low on Monday and other industrial metal prices declined as rising inventories pointed to lower demand, while U.S. soybean futures hit their lowest in three months, with ideal crop weather boosting supply just as Chinese buying slowed down ahead of the Olympics in Beijing.

"Global demand for commodities is coming down, so it's not surprising that there will be a cyclical correction from what were very high levels driven by the four years of robust back-to-back world GDP (gross domestic product) growth," said Geoff Lewis, head of investment services at JF Asset Management in Hong Kong.

"For those people who don't have any exposure, this would be a good entry point."    

Japan's iron and steel index ISTEL.was down 4.1 percent and the MSCI ACWI Materials Index was 1.3 percent lower.

Australian oil and gas producer Woodside Petroleum lost 5 percent, after a 4.9 percent fall in the S&P Energy index on Monday.

Top Chinese aluminium producer Chalco fell 5.4 percent and coal giant Shenhua slid 7 percent, while specialist coking coal miner Hidili lost a tenth of its value.

"After several years where the focus has been mainly on tight metal supplies, it seems the markets are finally focusing more on the implications of rapidly weakening demand," said MF Global analyst Edward Meir.

Data last Friday showed China's manufacturing sector contracted in July for the first time since an official survey began in 2005 although analysts said the slowdown was due at least in part to the shutdown of polluting industries ahead of the Olympics, which start on Friday.

"China's economic growth has shown a drastic deterioration lately, which is much faster and worse than many people's expectations," Citigroup Asia strategist Lan Xue said in a note to clients. - Reuters