NEW YORK — Bad bets on mortgages led to a $10 billion loss for Citigroup Inc. in the final quarter of last year, the largest in its 196-year history.

As a new wave of weak economic data intensified worries about a potential recession, the nation's biggest bank also cut jobs, slashed its dividend and turned to foreign investors for an infusion of cash.

The biggest hit came from an $18.1 billion write-down in the value of its investment portfolio. But the bank also set aside $4 billion yesterday to cover anticipated losses on loans to U.S. consumers — a sign that deflated home prices, high energy and food costs, and rising unemployment are making it difficult for many customers to keep up with their payments.

The news sent Citigroup's shares skidding 7 percent, wiping away almost $10 billion in market value on top of the $125 billion the shares already have lost over the past year.

Citigroup's tumbling shares helped send the Dow Jones industrial average plunging more than 230 points yesterday as the government also reported that retail sales fell in December and that unsold goods were piled up at manufacturers and wholesalers, signs that consumers are pulling back their spending.

Citigroup's chief financial officer, Gary Crittenden, told analysts on a conference call that the bank doesn't expect the housing industry to stabilize soon. He predicted that already slumping U.S. home prices could fall 7 percent further this year and by a similar amount in 2009.

That led some analysts to predict more writedowns could come this year. New chief executive Vikram Pandit acknowledged as much, saying "the environment continues to be uncertain" and that the company's results going forward "will definitely be influenced by the economy."

Besides the housing slump, economists are growing more worried about the snowball effects of a shaky job market — exacerbated by the loss of tens of thousands of jobs in the mortgage and housing industries.

Citigroup added to that total yesterday by saying it cut 4,200 jobs in the fourth quarter, separate from the 17,000 layoffs announced in the spring.

Crittenden said Citigroup will cut even more jobs. The bulk of the cuts have and will continue to be traders and investors in markets and banking — the main source of the bank's losses.

Pandit, who replaced Charles Prince in December, said the fourth-quarter results were "unacceptable" and that he has not finished his review of the bank's businesses, including the Smith Barney brokerage unit, and of whether parts of the global bank's operations should be sold.

Pandit said Citigroup will continue to sell "non-core" assets. The bank has already sold shares in Redecard, a card business in Latin America, and an ownership interest in a unit of the Japanese brokerage Nikko Cordial it bought last year.

It was only a couple of months ago that bank executives were adamant that the dividend would not be cut. But they backtracked yesterday; the 41 percent reduction in quarterly payouts to 32 cents a share will save $5 billion a year but deprive shareholders of that cash.

"Banks are traditionally reluctant to cut dividends," said Alfred Mettler, a finance professor at Georgia State University. "Now we have enough precendents that make it possible for other banks to slash their dividends without being questioned by their shareholders."

Financial companies have been the highest-dividend-paying sector in the stock market, but many — including Washington Mutual Inc., National City Corp. and government-sponsored lenders Freddie Mac and Fannie Mae — have pared those payouts in recent months.

The losses also prompted Citigroup to seek fresh capital again. The $12.5 billion it announced yesterday includes $6.9 billion from the Government of Singapore Investment Corp. for a 4 percent stake. Other investors are Capital Research Global Investors, Capital World Investors, the Kuwait Investment Authority, the New Jersey Division of Investment, shareholder Prince Alwaleed bin Talal of Saudi Arabia and former chief executive Sanford Weill and his family foundation.

Those convertible preferred shares, plus the $7.5 billion Citi got in November from the Abu Dhabi Investment Authority in exchange for a 4.9 percent stake, come at a hefty price: $1.7 billion a year in new dividends it must pay for the high-yielding stakes.

The bank also is seeking to raise another $2 billion in preferred shares.

Separately, Merrill Lynch said yesterday it will receive a total of $6.6 billion from the Korean Investment Corp., Kuwait Investment Authority and Japan's Mizuho Corporate Bank — besides the $4.4 billion it has already gotten from Singapore's state-run Temasek Holdings.

Citigroup's shares, which were trading around $55 a year ago, fell $2.21, or 7.6 percent, to $26.85 yesterday, a five-year low. Several mutual funds, including Charles Schwab's, have already bailed out of Citigroup to protect their customers from losing money.

The loss for the quarter totaled $9.83 billion, or $1.99 per share, compared with earnings of $5.13 billion, or $1.03 per share, during the same quarter a year earlier. Citigroup's revenue fell to $7.22 billion, down 70 percent from $23.83 billion in the final quarter of 2006.

Full-year net income for 2007 fell 83 percent versus a year earlier, to $3.62 billion.

The biggest factor in the fourth quarter's $18.1 billion write-down was Citigroup's bad bet on mortgage-backed bond instruments called collateralized debt obligations.

That was significantly wider than the $6 billion write-down the company took in the previous quarter, and bigger than the $8 billion to $11 billion it guessed in October that it would take for the fourth quarter.

Citigroup said that, as of Dec. 31, it had a total of $37.3 billion in direct subprime mortgage exposure, down from $54.6 billion three months earlier.

It was not all bad news for Citigroup, which posted record results in its international consumer, transaction services and wealth management segments. But the bank's strengths were not nearly big enough to offset its weaknesses — a trend that could continue if the U.S. economy weakens.

Jeffrey Harte, an analyst at Sandler O'Neill, said sufficient capital should not be a near-term problem for Citigroup even as its credit quality continues to deteriorate. Goldman Sachs analyst William Tanona noted that Citi's U.S. consumer businesses accounted for 30 to 40 percent of Citi's recent profits.

AP Business Writer Stephen Bernard contributed to this report.