WASHINGTON: The US Treasury warned on Monday that a boost to the economy will not come quickly despite a massive bailout and automakers pleaded for more help to save them from disaster in a global economic meltdown.

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

Testifying to Congress on progress of his 700 billion dollar US financial package, US Treasury Secretary Henry Paulson warned it was "not a panacea", as economic woes continued to deepen worldwide.

"The crisis in our financial system had already spilled over into our economy and hurt it. It will take a while to get lending going and repair our financial system, which is essential to an economic recovery," Paulson said.

"The purpose of the financial rescue legislation was to stabilise our financial system and to strengthen it. It is not a panacea for all our economic difficulties."

The chiefs of the "Big Three" US automakers were due in Congress on Tuesday to plead with lawmakers to save their treasured American industry.

The chairmen and CEOs of General Motors, Ford and Chrysler were to testify to a Senate committee as Democrats mounted a long-odds bid to pass a 25-billion-dollar rescue package.

Millions of jobs are threatened as the industry's crippling losses are exacerbated by the deepening economic crisis.

Senior Democratic party members condemned the reluctance of the White House 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 on Tuesday that it would sell a 20-percent stake in its Japanese partner Mazda Motor Corporation for 540 million dollars to raise cash.

"Concerns about the economy and the stock market's continued poor showing weighed heavily on sentiment," said Patrick O'Hare, analyst at Briefing.com.

Equities markets in Asia and Europe suffered sharp losses as investors fretted over a looming global recession and an announcement on Monday by US banking behemoth Citigroup 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.

Officials in Japan, which on Monday officially confirmed that it was in recession, said the country now faces the prospect of a full-year of no growth.

"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.

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.

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.

"Investors have basically put away their wallets," said ABN Amro Craigs investment advisor Martin Allison in Wellington. "We are going through a very volatile period." - AFP/de