Bailout fatigue gripped Asian markets Monday with most regional benchmarks retreating despite a U.S. government lifeline for ailing banking giant Citigroup.

News late Sunday in the U.S. that Washington would take a $20 billion stake in Citigroup and guarantee hundreds of billions of dollars in risky assets helped several Asian markets pare early losses, but not by much.

Hong Kong's Hang Seng index was down 210.26 points, or 1.6 percent, at 12,457.94, while Australia's key index recovered from morning losses to close 0.3 percent higher.

South Korea's Kospi slid 3.4 percent to 970.14. Markets in Singapore, Thailand, India and Malaysia also fell. Japan was closed for a holiday.

The government aid for Citigroup removes the immediate risk of a potentially catastrophic banking collapse but by itself doesn't resurrect the U.S. economy, which many analysts believe is sliding into its worst recession in decades.

For many investors, the bailout will do little to quickly restore confidence in the U.S. banking system or revive lending to consumers as the vital Christmas shopping season approaches.

"The market suspects the problems are getting worse and worse," said Poramet Tongbua, head of research at Tisco Securities in Bangkok, adding that investors had been speculating Washington might step in to rescue Citigroup, whose shares had lost 60 percent of their value last week.

Investors also shrugged off a rally on Wall Street Friday, when the Dow Jones industrial average surged more than 6 percent as U.S. President-elect Barack Obama appeared ready to tap the New York Federal Reserve chief Timothy Geithner as the next treasury secretary.

U.S. stock futures were mixed. Dow futures were down 42 points, or 0.52 percent, to 7,994, while S&P 500 futures were up 1 point, or 0.1 percent, at 793.

In mainland China, stocks were down mostly in dismay that authorities did not announce an interest rate cut over the weekend as some investors had speculated. The Shanghai Composite index fell 3.7 percent to 1,897.06.

Investors also seemed unimpressed with a weekend report by state television that provincial Chinese governments have proposed a total of 10 trillion yuan ($1.4 trillion) in investment projects since the Nov. 9 release of a nearly $600 billion stimulus plan. Stocks had already rallied on that earlier announcement, said Guo Yong, an analyst for Guangfa Securities.

"The speculation about the stimulus package is over. Why would investors split the news from the central government and the local government?" Guo said.

Financials around the region fell as Citigroup's problems underlined the dire conditions facing banks and other financial institutions. While Asian banks have much less exposure to the risky mortgage-backed securities than many U.S. and European banks, their shares have been battered as jittery investors dumped financial stocks across the board.

Top European bank HSBC was off nearly 2 percent in Hong Kong, and Commonwealth Bank of Australia sank 2.9 percent. KB Financial Group Inc., the holding company for South Korean lender Kookmin Bank, slipped 4.2 percent.

Investors were also awaiting a slew of data about housing, domestic production and consumer confidence in the U.S. that will shed more light on the health of the world's largest economy.

Oil prices fell in Asian trade, with light, sweet crude for January delivery down 50 cent to $49.45 a barrel in electronic trading on the New York Mercantile Exchange by midday in Singapore.

In currencies, the dollar weakened to 95.19 yen from 95.91 yen, while the euro was nearly flat at $1.2585.