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This paper studies the asymptotic outage performance of incremental redundancy automatic-repeat-request (INR-ARQ) transmission over multiple-input multiple-output (MIMO) block-fading channels with discrete input constellations. We first show that transmission with random codes using a discrete signal constellation across all transmit antennas achieves the optimal outage diversity given by the Singleton bound. The optimal SNR-exponent and outage diversity of INR-ARQ transmission over the MIMO block-fading channel are then analysed. We show that a significant gain in outage diversity is obtained by providing more than one bit feedback at each ARQ round. Thus, the outage performance of INR-ARQ transmission can be remarkably improved with minimal additional overhead. A practical feedback-and-power-adaptation rule is proposed for MIMO INR-ARQ, demonstrating the benefits provided by multibit feedback. Although the rule is sub-optimal in terms of outage performance, it achieves the optimal outage diversity.