New York City ? Bad bets on mortgages drove a $10 billion loss for Citigroup Inc. in the last three months of 2007, the worst in its 196-year history.

The nation’s largest bank also announced Tuesday it had cut 4,200 jobs and slashed its dividend, and the poor performance forced Citi to turn to foreign investors for an infusion of cash.

The news helped drag the Dow Jones industrial average down more than 277 points and wiped out almost $10 billion in market value in Citigroup stock alone. Shares in the bank skidded 7 percent to a new five-year low.

The biggest hit came from a $19.1 billion writedown in the value of the bank’s investment portfolio. But it also set aside $4 billion Tuesday 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.