Most Asian and Pacific markets added to their losses on Tuesday after Wall Street stocks slipped in a volatile session as Washington debated a bailout for the top three U.S. automakers.
Tokyo's Nikkei 225 index was down nearly 2 percent at the midday break, while Australia's All Ordinaries index dropped 2.6 percent, reported CNN.
Seoul's KOSPI index tumbled 3.2 percent and the Hang Seng index in Hong Kong slipped 2.9 percent.
On Wall Street, investors eyeing Citigroup's massive job losses and weak manufacturing report pushed both the Down Jones industrial average and Standard & Poor's 500 index down 2.6 percent Monday. The Nasdaq composite lost 2.3 percent and ended at 1,482 -- a fresh 5-1/2-year low.
Stocks tumbled through the morning, turned higher near midday and then retreated again in the afternoon.
Trading volume was light, with investors holding back ahead of some key economic reports due later in the week and the hearings on the future of the automakers.
"Nobody knows what to do right now," said Dave Rovelli, managing director of U.S. equity trading at Canaccord Adams. "We know we're in a recession, but we don't know how long it's going to last."
"If you're looking longer term, you might want to get in," he said. "But for someone with a shorter-term horizon, there's no reason to get off the sidelines right now."
He said that in the short term, Wall Street is focused on what's going to happen with the Big Three automakers.
"What I'd like to see the rest of this week is a series of small moves, rather than triple-digit days," said Michael Church, portfolio manager at Church Capital. "We need to see some of the volatility get wrung out."
If the market could manage to have a mild week, he said, it would set it up for a year-end rally.
"At this point, so much of the bad news is factored in that some good news might jolt the market," he said.
Congress is debating this week whether to bail out the hard-hit auto industry with $25 billion on top of the $25 billion that General Motors, Ford Motor and Chrysler have already received. The money would come from the $700 billion bank bailout plan and a vote is expected as soon as Wednesday.
GM shares added 7 percent, while Ford lost 1.5 percent.
The Bush administration opposes taking money from the bailout to help the automakers, and wants to see it come from a Department of Energy program already approved to develop fuel-efficient vehicles.
President-elect Barack Obama on Sunday said he thinks aid for the sector is needed, but that it needs to be designed as a long-term strategy, not as a blank check.
Citigroup said it's cutting over 50,000 jobs in its latest effort to cut costs amid the credit crisis and economic slowdown. The New York-based bank has already cut its payrolls by around 23,000 over the last year.
Citi said that, in addition to job cuts, it is looking to cut expenses by about 20 percent, and that it has already cut its assets by more than 20 percent since the first quarter of 2008. Shares fell nearly 3 percent.
Monday's economic news brought further indications that the economy may be in recession.
The New York Empire State index, a regional reading on manufacturing, worsened to negative 25.4 in November from negative 24.6 in October. That was short of forecasts for a reading of negative 26 but still brought the index to the lowest point in its seven-year history.
Anything negative implies weakness, anything positive suggests growth.
Another report showed industrial production grew more than expected in October after September's drop off, the worst in 62 years. Capacity utilization increased a bit short of forecasts.
Reports are due later in the week on producer and consumer prices, housing starts and building permits, leading economic indicators and the minutes from the last Federal Reserve meeting.
The United States is in a recession and is likely to stay in it for quite some time, according to a majority of economists surveyed by the National Association for Business Economics.
U.S. light crude oil for December delivery eased $2.05 to settle at $54.95 a barrel on the New York Mercantile Exchange, the lowest close since January 2007.
Gasoline prices dipped another 1.8 cents to a national average of $2.087 a gallon, according to a survey of credit-card activity released Monday by motorist group AAA.
The decline marks the 61st consecutive day that prices have decreased. During that time, prices dropped by $1.77 a gallon, or 45.8 percent.