The ‘Reuters-Tankan’ survey of confidence at big Japanese manufacturers posted its biggest one-month fall on record in November.

Battered Markets

US crude oil prices dropped more than $1 a barrel to $48.25 a barrel, its lowest since May 2005, extending the previous session's falls.

On Monday, the S&P 500 index tumbled 8.9 percent, with investors set to ride out a tumultuous 2008 on a rocky note.

The yen surrendered some of its gains after bolting higher on Monday as Japanese investors took advantage of the rise to buy higher-yielding currencies for cheaper.

The dollar edged up 0.4 percent from late US trade to 93.60 yen , while the euro was a tad higher at 118.25 yen .

The yen's fortunes remain closely tied to that of stocks due to its role in the carry trade -- using the low-yielding Japanese currency to buy higher-yielding currencies and other assets.

Safe-have government bonds climbed as investors sought a refuge from the latest flare-up of volatility.

The yield on 10-year Japanese government bonds dropped 3.5 basis points to 1.365 percent, taking them back near lows hit in October when the Nikkei plunged to a 26-year low.

US Treasuries pushed up in Asia, with the benchmark 10-year note rising 5/32 in price to yield 2.710 percent -- near a five-decade low of 2.650 percent hit on Monday after Bernanke said the Fed could start buying Treasuries and agencies.

The Fed is widely expected to cut rates later this month to 0.5 percent, the lowest since the 1950s, and Bernanke said lower rates are feasible but conventional policy is constrained.

... contd.