Banking layoffs, a deeper British recession than expected and confirmation of a recession in Japan kept world sharemarkets in bearish mood at the start of the week’s trading.

On Wall Street, the main Dow Jones index is swinging between gains and losses as traders absorb data on a rise in industrial output last month and big job losses at Citigroup.

Earlier, benchmark indexes fell in all 18 European markets. The Dow Jones Stoxx 600 Index lost 2.6% to 200.37, pushing this year's decline to 45%. The UK's FTSE 100 slipped 2.7%. Germany's Dax sank 3.3%, as did France's Cac 40.

Citigroup fell more than 1% on Wall Street after it announced it would reduce its global headcount 20% from its peak of 375,000 at the end of 2007. Citigroup is also planning to reduce expenses by 20%, targeting 2009 expenses of $50 billion to $52 billion.

Japanese recession

New data showed Japan has slipped into recession for the first time since 2001, joining Europe in a global economic downturn. Japanese companies have cut spending amid weak exports.

The Nikkei 225 Index ended 0.7% higher in Tokyo despite the glum news. But other Asian indexes in Hong Kong and Bombay drifted lower.

Currencies and commodities

The yen fell against the euro and the dollar as US.stocks pared their decline, slowing the sale higher- yielding assets funded in Japan's currency. The yen is down to 123.27 per euro and 97.07 for the dollar, which decreased 1% to $US1.2728 per euro.

The Australian dollar, the worst-performing currency in the past six months, may be a bargain according to popular indicies – iPod music players and Big Mac hamburgers.

The classic iPod costs $US249 in the US and the equivalent of $US220 in Australia, a 24% discount.

Crude oil futures for December delivery fell 33USc, or 0.6%, to $US56.71 a barrel – a 61% fall since reaching a record $US147.27 on July 11. Spot prices rose to $US58.16 a barrel after earlier trading down to $US55.29.

Gold fell in New York as the dollar continued its rally. Futures for December delivery fell $US10.70, or 1.4%, to $US731.80 an ounce.

In other overnight developments:

US industrial production rebounded in October after refinery shutdowns from Gulf Coast hurricanes caused the biggest drop since 1946 the month before. The New York Fed said its factory index fell to a record low.

The UK economy will contract the most in almost three decades next year and house prices are now falling at the fastest pace since at least 2002. The Confederation of British Industry says unemployment could peak at close to 2.9 million by 2010, up from 1.8 million at present.

Germany’s Chancellor Angela Merkel will hold crisis talks with General Motors’ Opel division, which is seeking €1 billion in government credit guarantees. Earlier, GM said it had sold its remaining 3% stake in Japan's Suzuki Motor Co on the Tokyo stock market for about $US230 million.

Iceland will sign a $US6 billion International Monetary Fund-led loan deal after reaching an agreement on how to repay depositors at the overseas unit of one of its failed banks.

Top executives at Goldman Sachs have decided to forgo their 2008 bonuses, giving up potentially tens of millions of dollars in payouts.