Asian economies stumble and U.S. faces retail test
ArcelorMittal steel to cut 9000 jobsBy Ralph Boulton and Lewis Krauskopf
LONDON/NEW YORK (Reuters) - U.S. shoppers awoke early for post-Thanksgiving sales on Friday in a key test of the country's ability to lead an economic recovery as sharp production declines in Asia gave fresh evidence of the global crisis.
Continued fighting in India's commercial capital, Mumbai, where Islamist militants launched attacks on Wednesday, and lingering fears of a coup in Thailand underlined the political risks facing emerging markets already grappling with economic turmoil. Indian commandos, appeared, however, to be flushing out the last of the militants.
In Europe, data showed the euro zone economy shrinking, inflation falling more quickly than expected and a steeper rise in unemployment than predicted -- all factors that raise pressure on the European Central Bank to cut interest rates substantially next week.
The worst crisis in decades, which has humbled major world financial institutions, continued to encroach on the broader economy, driving output cutbacks, unemployment and bankruptcies.
The shake-up of European banks continued as the British government acquired a majority stake in Royal Bank of Scotland and Germany's Commerzbank accelerated its takeover of Dresdner Bank.
A major European builder, Austria's Strabag, announced it would cut its investments by more than half next year.
German industrial conglomerate ThyssenKrupp posted better than expected 2007-8 pretax profit, but gave no forecast for the coming year. The company said it could not rule out production shutdowns, shorter working weeks and layoffs in hard-hit steel, motor and construction sectors.
Chinese insurer Ping An provided a striking illustration of the global nature of the crisis when, according to a government source, it asked China's government to help seek compensation from Belgium over its losses in the European financial group Fortis after the group's nationalization.
U.S. stocks slipped in thin holiday trading. European shares were higher. Japan's Nikkei ended 1.7 percent higher.
"BLACK FRIDAY" SALES
Many will be looking this weekend to the United States, where the crisis began with a collapse in the U.S. mortgage market that saddled banks throughout the world with bad debt.
America's "Black Friday" sales on the day after the Thanksgiving holiday provide a strong gauge of consumer confidence, a major driver of the U.S. economy.
Shoppers rose before dawn as retailers from Wal-Mart to Macy's Inc and Best Buy Co Inc opened their doors early and offered steep discounts. But store traffic appeared about 25 percent lighter than a year ago, a top retail analyst said.
The run-up to Christmas brings up to 40 percent of annual sales for retailers, but experts predicted this year could be the worst sales season since the early 1990s as Americans, already hit by a housing slump, mounting job losses and credit crunch, cut spending on nearly everything but necessities.
"Consumer spending on gifts for the holiday season is going to be down considerably," said Eric Anderson, professor of marketing at the Kellogg School of Management, Northwestern University, in Illinois. "Black Friday will be the first indicator of how bad it's going to be." Continued...
Mumbai Attacks
Did you witness the attacks? We are inviting citizen photojournalists to send in their best images. If you think your picture captures the moment, please send it to pics@reuters.com. Full Coverage
