TOKYO - ASIAN shares fell sharply on Tuesday on mounting fears of a long global recession after US banking giant Citigroup announced 50,000 job cuts and carmakers on both sides of the Atlantic pleaded for help.
A day after Japan confirmed it was in recession, the country's economics minister said he has 'no confidence at all' that the world's second largest economy will grow next year.
Investors were unsure where the next boost to the global economy would come from, after world leaders vowed at a weekend summit to cooperate to galvanise growth but stopped short of announcing specific steps.
'Market eyes are on global recession fears,' Mr Kazuhiro Takahashi, general manager at Daiwa Securities SMBC, said, with Japan following Germany and other eurozone countries into recession.
'The financial summit has left the impression that economic stimulus measures are unlikely to get into gear,' Mr Takahashi added.
Asian markets tumbled, led by Chinese share prices. Stocks slumped 6.3 per cent in Shanghai, 6.0 per cent in Hong Kong, 3.9 per cent in Seoul, 3.6 per cent in Sydney and 2.3 per cent in Tokyo.
'Who would want to be in this market?' asked ABN Amro Craigs investment advisor Martin Allison in Wellington, where shares ended down 1.0 per cent.
'Investors have basically put away their wallets in view of the fact that we are going through a very volatile period.'
In Japan, Economic and Fiscal Policy Minister Kaoru Yosano told reporters: 'In reality we see few factors that would contribute to positive growth' in the fiscal year starting next April.
'If I judge what is happening honestly, I have no confidence at all now that there will be positive growth.'
As the fallout from the global financial crisis widened, the International Monetary Fund agreed a 518-million-dollar line of credit for Serbia to help the country weather the turmoil.
In Germany, executives of German automaker Opel turned to Chancellor Angela Merkel for government help in case its US parent company General Motors goes bankrupt.
Opel said on Friday that it needed the German state to guarantee more than one billion euros (S$1.98 billion) in loans.
The head of the Eurogroup of eurozone finance ministers, Mr Jean-Claude Juncker, voiced support for a European 'rescue strategy' for the auto industry in response to US plans along the same lines.
Australia's biggest investment bank, Macquarie Group, said its first-half net profit plummeted 43 per cent amid the global financial crisis.
Worries about the future of Citigroup deepened after the banking behemoth said it was slashing its global workforce by about 20 percent compared with its peak level of 375,000 in late 2007.
Banking giant HSBC said it had cut 450 staff in Hong Kong in anticipation of a deteriorating global economy.
Yahoo, whose share price has plunged over the past year, said co-founder Jerry Yang, who spurned a takeover offer from Microsoft earlier this year, was stepping down as chief executive of the pioneering Internet company.
Treasury Secretary Henry Paulson and Fed chief Ben Bernanke were due to testify Tuesday to Congress on the 700-billion dollar (S$1 trillion) Wall Street bailout plan.
The chiefs of the 'Big Three' US automakers were also to travel to Capitol Hill to plead with lawmakers to save their American industry, amid fading hopes for a quick congressional bailout.
Democrats have launched a push to pass a 25-billion-dollar rescue package for the auto industry but the White House warned against draining funds from a huge finance industry bailout.
The Dow Jones Industrial Average dropped 2.63 percent Monday as a series of rally attempts failed to hold and selling accelerated late in the day.
'Wall Street, as well as Main Street, continues to suffer from a massive lack of confidence,' said Mr Fred Dickson, market strategist at DA Davidson & Co. -- AFP
