The day began on a sour note, following word that Japan - the world's second largest economy - is officially in recession. Growth contracted by 0.1% in the third quarter, below expectations for a flat reading and following the second quarter's downwardly revised 0.9% decline. Second-quarter growth was originally reported at -0.7%.

News that Citigroup plans to slash some 50,000 jobs also weighed heavily on markets. The Dow Jones Industrial fell 223 points, or 2.6%, to 6273, the S&P500 fell 22 points to 850, while the Nasdaq slid 34 points, or 2.3%, to 1482. Canada's S&P TSX index fell 260 points, or 2.8%, to 8795.

In data releases, manufacturing in the state of New York failed to improve in November following a massive decline in the October report, according to the New York Fed's Empire State Manufacturing survey released Monday. The index fell to -25.4 from the previous month's -24.6, marking a new low in the survey since its inception in 2001. The consensus was looking for a -26.0 reading. The employment index saw a major decline in November, falling to -28.9 from the prior month's -3.7 reading. This is the fourth consecutive month of contraction in the report.

"Manufacturing activity, which cushioned the economy earlier in the year on the strength of exports, appears to have plunged into a deep recession, which is also the message of the ISM data," economists from RDQ Economics noted.

The Federal Reserve's measure of industrial production improved more than anticipated in October, by 1.3% month-over-month, yet the gain can be attributed to the resumption of output following multiple closures due to Hurricanes Ike and Gustav. The consensus forecast was for a 0.2% improvement. However, September's already-weak 2.8% loss was revised down to a 3.7% decline.

Paul Ashworth, senior U.S. economist at Capital Economics, said the rebound in total output is "pretty paltry compared with the massive 3.7% m/m drop in production in September." He attributed much of the gain to mining output, which jumped by 6.1% in the month, following an 8.5% decline in September.

According to the Federal Reserve Bank of Philadelphia survey released on Monday, the U.S. recession is expected to last 14 months. The Philly Fed survey expects real GDP to decline at an annual rate of 2.9% in the fourth quarter and 1.1% in the first quarter of 2009. The survey expects growth to resume in the second quarter of 2009, coming in at 0.8%, 0.9% in the third quarter and 2.3% in the fourth quarter.

The National Association for Business Economics released its November outlook report, which suggests a marked slowdown in U.S. fourth-quarter GDP growth will continue into 2009. According to the outlook report, 96% of NABE members believe that a recession has begun. More than half of the panel members estimate that the recession began in the fourth quarter of 2007.

There were no key economic data releases in Canada.

According to a report released from OPEC, worldwide demand for oil is expected to grow in 2009 despite imminent recessions in the developed world. Demand declines in the United States, Europe and Japan will be offset by increases in Asia and the Middle East, leading to a 500,000 barrel per day increase in consumption next year. The forecast was lowered by 300,000 bpd because of signs of an economic slowdown and demand is now expected to average 86.68 million barrels per day.

In overnight news, the euro zone trade balance came in as expected at €5.7 billion in seasonally adjusted terms in September, unchanged from August's figure, which had been revised down from an initial deficit estimate of €6.1 billion, according to Eurostat. Seasonally adjusted exports rose by 2.2% and imports by 2.1%, Eurostat added.

By Stephen Huebl, This email address is being protected from spam bots, you need Javascript enabled to view it , with contributions from Steve Stecyk, This email address is being protected from spam bots, you need Javascript enabled to view it , Patrick McGee, This email address is being protected from spam bots, you need Javascript enabled to view it , Todd Wailoo, This email address is being protected from spam bots, you need Javascript enabled to view it , Erik Kevin Franco, This email address is being protected from spam bots, you need Javascript enabled to view it and Adam Button, This email address is being protected from spam bots, you need Javascript enabled to view it , edited by Sarah Sussman, This email address is being protected from spam bots, you need Javascript enabled to view it

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