Japan now faces the prospect of a full-year of no growth, officials warned on Tuesday, in a global economic meltdown that has forced US auto chiefs to plead for government help to save their once-proud empire.

Equities markets in Asia and Europe suffered sharp losses as investors fretted over the scope and depth of a looming global recession and the impact of an announcement by US banking behemoth that it plans to cut 50,000 jobs worldwide.

Investors also appeared uncertain where a much-needed fillip for the global economy would come from after world leaders at a weekend summit vowed to cooperate to galvanise growth but announced no specific measures.

"Market eyes are on global recession fears," said Kazuhiro Takahashi, general manager at Daiwa Securities SMBC, said.

"The financial summit has left the impression that economic stimulus measures are unlikely to get into gear," Takahashi added.

Japanese prospects suffered a fresh blow on Tuesday when the country's economics minister said he had "no confidence at all" that the world's second-biggest economy would grow next year.

"In reality we see few factors that would contribute to positive growth" in the fiscal year starting next April, Economic and Fiscal Policy Minister Kaoru Yosano told reporters.

"If I judge what is happening honestly, I have no confidence at all now that there will be positive growth," he said, a day after official figures showed Asia's biggest economy was in recession.

The government has never before predicted a contraction for the upcoming year in its annual economic outlook report, which is published each December. The worst-ever forecast was for zero growth in fiscal 2002.

The Paris-based Organisation for Economic Cooperation and Development has forecast that the Japanese economy was likely to shrink 0.1 percent in 2009, while some economists expect an even more severe contraction.

Asian markets tumbled, led by Chinese share prices. Stocks fell 6.3 percent in Shanghai at the close, 4.5 percent in Hong Kong, 3.9 percent in Seoul, 3.6 percent in Sydney and 2.3 percent 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 percent.

"Investors have basically put away their wallets in view of the fact that we are going through a very volatile period."

In Europe, where equities markets closed with sharp falls on Monday, share prices fell at one point by more than 2.0 percent before recovering slightly.

The London FTSE 100 index was down 1.20 percent at mid-day, the Paris CAC 40 had shed 1.75 percent and the Dax in Frankfurt 1.11 percent.

Trading was suspended on both of Russia's main stock markets on Tuesday after they tumbled nearly five percent in the early hours of dealing.

US lawmakers meanwhile faced a busy day of hearings, with Treasury Secretary Henry Paulson and Federal Reserve Chairman Ben Bernanke due to give Congressional testimony on the status of a 700-billion-dollar bailout package for stricken US banks.

But banks are not the only US institutions under siege.

The heads of , Ford and Chrysler, the fabled "Big Three" US automakers, were also due in Congress to plead with lawmakers to save their talismanic American industry.

The chairmen and CEOs will testify before a Senate committee as Democrats mount a long-odds bid to pass a 25-billion-dollar rescue package.

Their testimony, to be followed by an appearance before a House panel Wednesday, comes with millions of jobs threatened as the industry's crippling losses are exacerbated by the deepening economic crisis.

Senior Democratic party members condemned the reluctance of the and Republican leaders to siphon off the money from the 700-billion-dollar finance industry bailout.

"All it would take is one stroke of a pen and that problem would be solved," Senate Majority leader Harry Reid said.

"We are seeing a potential meltdown in the auto industry, with consequences that could directly impact millions of American workers and cause further devastation to our economy."

Ford Motor Company said said on Tuesday that it would sell a 20-percent stake in its Japanese partner Mazda Motor Corporation for 540 million dollars to raise cash.

The US automaker, which lost 129 million dollars in the third quarter of this year, added that it would remain Mazda's largest shareholder and would keep a seat on the Japanese automaker's board of directors.

In Britain analysts raised the prospect of deflation, a fall in prices that can stifle growth, after official data showed that 12-month inflation fell to 4.5 percent in October from a 16-year-high of 5.2 percent in September.

Jonathan Loynes, chief European economist at the Capital Economics consultancy in London, said the British economy was on a deflationary path.

"October's sharp fall in UK CPI inflation from 5.2 percent to 4.5 percent is the first step along a road that is likely to end in the first bout of deflation in the UK economy in almost half a century," Loynes said.