Earlier, Asian markets slid with Japan's Nikkei 225 stock average tumbled 533.53 points, or 6.4 percent, to 7,863.69, and Hong Kong's Hang Seng index lost5 percent to 13,405.85.
The heavy losses in Asia followed near 5 percent declines in Europe on Monday and the near 700 point, or 7.7 percent, slide in the Dow Jones index of leading U.S. shares, which wiped out more than half of last week's gains.
The gloom gripping world markets at present was stoked by a run of bad data across the world, increasing fears that the length and depth of the global economic downturn will be bigger than anticipated.
It all culminated with Monday's announcement by the National Bureau of Economic Research (NBER), considered the arbiter of the U.S. economic cycle, that the world's largest economy entered a recession in December 2007, much earlier than most predictions.
The optimism which saw U.S. stocks rise for five straight days last week for the first time since July 2007, has all but evaporated amid renewed worries about the global economy. The data expected out of the U.S. over the rest of the week, culminating in Friday's closely-watched jobs report for November, is expected to make for further grim reading.
"With so much gloomy economic news in circulation right now it's difficult to see how the current mindset can be broken," said Matt Buckland, a dealer at CMC Markets.
U.S. stock futures were pointing to some modest gains later. Dow futures were up 124 points, or 1.5 percent, higher at 8,263 while the broader Standard & Poor's 500 index, which dived 8.9 percent Monday, was up 14.10 points, or 1.7 percent, at 829.90.
Despite the recession which has taken hold across the developed world, some companies are managing to post solid performances. One notable example was British supermarkets chain Tesco PLC Tuesday, which saw its share price rise around 7 percent after it reported like-for-like sales excluding revenues from its gas pumps up 2 percent during the third quarter; including gas the total was up 3.2 percent.
"Yet again Tesco has defied the laws of gravity kicking market recession fears firmly in the teeth," said Howard Wheeldon, senior strategist at BGC Partners.
Tesco will be hoping that the widely-anticipated 1 percentage point rate reduction Thursday from the Bank of England will help entice shoppers in the crucial Christmas trading period ahead. The European Central Bank is also expected to cut its benchmark rate by at least half a percentage point on Thursday.
Earlier, Australia's central bank slashed its key interest rate Monday a full percentage point to 4.25 percent in an attempt to prevent the economy from sliding into recession. But investors took scant comfort from the move, sending the benchmark S&P/ASX 200 index down 4.2 percent to 3,528.2.
Benchmarks in the Philippines, Taiwan, India and South Korea also dropped sharply.
Markets on mainland China were mixed, with food processors up following a lifting of price controls but banks down on economic jitters. The benchmark Shanghai Composite Index slipped 0.3 percent, while the Shenzhen Composite Index rose 1.4 percent.
The bleak outlook for the world economy drove oil prices to three-year lows, with light, sweet crude for January delivery down $0.52 to $48.76 a barrel.
In currencies, the dollar was 0.1 percent lower at 93 yen, while the euro was 0.1 percent higher at $1.2621. The pound meanwhile, which slumped around 3.5 percent against the dollar Monday after dismal British manufacturing data, was down another 0.1 percent at $1.4849.
The strength of the yen in particular is having a major impact on Japanese stocks as the stronger currency erodes overseas earnings and makes Japanese products more expensive for consumers abroad. Japan's top automaker, Toyota Motor Corp., tumbled 4.1 percent, while Honda Motor Corp. dropped 6.9 percent. Sony Corp. Sony Corp. fell 4.6 percent.
Associated Press Writer Tomoko A. Hosaka in Tokyo contributed to this report.
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