Asia stocks sink after Wall Street tumbles

(CNN) -- Asian stocks fell on Friday after the S&P 500 on Wall Street lost 6.7 percent to close at its lowest point since 1997 amid recession fears.

Japan's Nikkei was down more than 2 percent in morning trade, and Australia's All Ordinaries was down more than 3 percent. South Korea's KOSPI was flat, and Hong Kong's Hang Seng was down nearly 3 percent.

Concerns over the ailing U.S. auto industry, a 16-year high in U.S. unemployment and the Dow Jones' lowest closing price since 2003 all weighed on investors' minds.

The Nasdaq dropped 5.1 percent, and the benchmark Dow -- which finished the previous session below 8,000 points for the first time in five years -- closed another 5.6 percent down.

Citigroup Inc.'s shares tumbled 26 percent to their lowest level in more than 15 years, despite news that Saudi Prince Alwaleed Bin Talal, the bank's largest individual shareholder, planned to increase his stake to 5 percent. So far this year, the stock is down 83 percent.

Investors continued to flock toward U.S. Treasury bonds, as yield on the benchmark 10-year note fell to 3 percent, an all-time low.

Gloomy economic forecasts and market misery have impacted heavily on oil since it reached an all-time high of $147.27 a barrel in mid-July.

Light sweet crude Thursday settled at $49.62 -- down $4 and the lowest close since May 2005.

Meanwhile, the number of Americans filing for unemployment insurance surged to its highest levels in 16 years, the U.S. Department of Labor said Thursday.

The number of initial filings for state jobless benefits increased by 27,000 to 542,000 for the week ending November 15, according to government figures.

In a statement, White House press secretary Dana Perino said U.S. President George W. Bush was in favor of legislation being considered in Congress to extend benefits for the jobless.

"The recent financial and credit crisis has slowed the economy, and it's having an impact on job creation," Perino said. "The president is always concerned when anybody loses their job and wants to ensure that anybody who wants to work can find employment."

More than four million Americans were collecting unemployment benefits in the week ending November 8 -- the highest figure in 26 years.

In Europe, major indexes spent the day skulking well short of their opening prices. London's FTSE 100 was down more 130 points at the close or 3.2 percent. Both Paris' CAC and Frankfurt's DAX were also down more than 3 percent.

Investors are grappling with a possible bankruptcy in the automotive industry, something analysts say could have dire implications for the broader economy, as a second day of congressional hearings ended without resolution.

"The crisis of confidence is back on the front page," said Todd Morgan, senior managing director of Bel Air Investment Advisors, a Los Angeles-based firm with nearly $6 billion in assets under management.

"You need some positive catalyst, something, to change the attitude of investors [and] the auto debate is hurting confidence."