By 
By Kevin Plumberg
U.S. stocks were at the lowest in more than a decade and oil prices fell to 3-1/2-year lows, trading below $50 a barrel, as commodity prices slumped on expectations of reduced demand as economies from the euro zone to Taiwan contract.
The fate of U.S. corporate titans like General Motors
Citigroup, not long ago the world's most valuable financial firm, was reportedly considering selling itself.
Democratic congressional leaders demanded executives at the Big Three automakers come up with a detailed business survival plan in exchange for their support of up to $25 billion in loans.
"It's one car crash after another for the markets right now and the risk of global economic recession is deepening by the day," said Martin Slaney, head of derivatives at GFT in Australia.
Investors priced in a 1-in-3 chance that the U.S. Federal Reserve would cut its benchmark interest rate to 0.25 percent from 1 percent on or before its last policy meeting of the year on December 16.
A growing number of Fed officials are talking about an unprecedented monetary expansion, with more economists expecting the base rate to hit zero.
Japan's Nikkei share average <.N225> dropped 2.2 percent, extending its weekly decline to around 12 percent.
Stocks in the Asia-Pacific region excluding Japan were down 2 percent, according to an MSCI index <.MIAPJ0000PUS>, after earlier slipping to their lowest since October 2003 when global markets were just beginning to recover from the bursting of the dotcom bubble.
The MSCI All-Country World Index <.MIWD00000PUS> fell 0.5 percent, plumbing the lowest levels since April 2003, having now fallen 53 percent this year.
Hong Kong's Hang Seng index <.HSI> shed 3 percent, with widespread weakness most acute in the financial, real estate and commodity-related sectors.
ARE WE THERE YET?
A drop of more than 50 percent in the S&P 500 U.S. stocks index <.SPX> from its peak, the worst bear market since The Great Depression, has uncovered attractive valuations. Still, economic uncertainty has made value investing tricky business.
"We see this as an attractive buying opportunity given the magnitude of the drop," said Dariusz Kowalczyk, chief investment strategist with CFC Seymour in Hong Kong.
"Moreover, the U.S. should emerge from recession in Q2 09, which implies that -- historically -- stocks are likely to bottom out in late Q4 08," he said in a note.
U.S. crude oil for January delivery was down more than half a dollar at $48.85 a barrel, after the December contract settled down $4 at $49.62, the lowest settlement since mid-May 2005. Oil has tumbled by nearly $100 from record highs in July.
For global investors, the yen is a weather vane of risk taking, with strength in the Japanese currency reflecting distaste for anything resembling risk.
The yen slipped from 3-week highs against the dollar and euro on Friday as short-term speculators booked profits, but it retained its overall strength with fears of a deep global recession rippling through markets.
The dollar traded at about 94.00 yen, up 0.4 percent on the day, and recovering from a 3-week low of 93.55 yen. The euro edged up 0.3 percent to 117.05 yen, above a 3-week low of about 116.45 yen.
"The market needs positive news on the future of U.S. automakers to make a decisive rebound, or there's little prospect that the current support for the yen will abate soon," said Minoru Shioiri, chief manager of forex trading at Mitsubishi UFJ Securities in Tokyo.
Government bond prices remained in demand, with falling equity markets sending danger signals for risk taking.
Japanese government bond futures hit a 2-month high on the slide in Tokyo share prices and the previous day's decline in U.S. Treasury yields to historic lows. December 10-year JGB futures hit the highest since mid-October, at 140.10.
The difference of 10-year yields over 2-year yields, known as their yield curve, has been steepening globally since the credit crisis began more than a year ago, reflecting expectations for lower policy rates.
However, the flight to safety in the last week has flattened curves, especially in the euro zone and United States.
(Additional reporting by Satomi Noguchi in TOKYO and Mette Fraende in SYDNEY, editing by Dhara Ranasinghe)
