TOKYO - CENTRAL banks are poised to step up their efforts this week to tackle the deepening economic crisis as the bosses of the Big Three US carmakers return to Congress to plead for emergency aid.

Japanese officials painted a bleak outlook for the world's second largest economy, with the country's top central banker warning that deflation could rear its ugly head again next year as an economic slump deepens.

As the heads of the Big Three US carmakers prepared to return to Washington to beg for a US$25 billion (S$38.14 billion) rescue package, the head of Renault-Nissan warned countries faced huge job losses unless they act quickly to support the industry.

'Job destruction will be massive in those countries that do not rapidly help the auto sector to finance itself,' said Mr Carlos Ghosn, who is credited with saving Nissan from the brink of bankruptcy a decade ago.

The chiefs of General Motors, Ford and Chrysler are due to testify before Congress on Wednesday and Friday, after being sent away last month to come up with a new restructuring plan to recover from their current crisis.

Central banks are also centre stage this week with interest rate cuts expected in the eurozone, Britain, Australia and New Zealand to tackle the escalating economic crisis.

Stocks lost ground across much of Asia at the start of the week as investors remained wary of buying ahead of the key events. Shares lost 1.35 per cent in Tokyo and 1.6 per cent in both Sydney and Seoul.

'It's time for another downturn,' said Mr Hideaki Higashi, a strategist at SMBC Friend Securities. 'Investors are selling, anticipating a correction after the string of advances.'

Markets were jittery ahead of US data including a manufacturing index due later Monday and monthly employment figures due on Friday, as fears grow that the world's largest economy is slipping deeper into recession.

'There will be a plethora of bad news on economic growth so central banks will need to act boldly to prevent sentiment hitting rock bottom once again,' warned NAB Capital analyst John Kyriakopoulos.

'What is unclear is whether investors react by thinking that aggressive rate cuts will help revive economies down the track or conclude that they indicate economic conditions are even worse than thought,' he added.

Japan's central bank is preparing new measures to help firms gain access to credit amid a worsening credit crunch in Asia's biggest economy, its governor Masaaki Shirakawa said.

'Financial conditions in Japan seem to have become less accommodative at an accelerating pace, particularly in terms of availability of funds, reflecting the turmoil in global financial markets,' he said in a speech.

Japan's economy 'is likely to continue to show increased sluggishness over the next several quarters,' he added, warning that consumer prices may start to fall again 'for a brief period' in the next fiscal year.

Mr Kaoru Yosano, the economics minister, also warned that Japan could slip back into deflation, which cuts into corporate profits and deters consumers from spending because they can get a cheaper price in the future.

'I cannot tell you it will be a bright next day,' he told the Financial Times in an interview published on Monday.

'We are moving to the next phase of shrinking consumption - some call it deflation - production going down and prices going down.'

Adding to worries about the economic downturn in Asia, South Korea said its exports tumbled 18.3 per cent in November compared with a year earlier.

And German retail sales plunged by 1.6 per cent in October as consumers tightened their belts amid a recession in Europe's biggest economy. -- AFP