The New Nation - Internet Edition

AFP, London

The global financial crisis took a fresh toll on economies from Asia to Europe on Friday, with Japan and India suffering setbacks and Sweden the latest European nation to fall into recession.

Japan slipped deeper into recession with factory output tumbling 3.1 percent and consumer spending dropping 3.8 percent in October, official data showed.

The figures were "stunningly bad," said Societe Generale's chief Asia economist, Glenn Maguire.

"Japan's industrial activity is set to worsen in the near- term, perhaps by an unprecedented degree, as exports to the US have plunged over the past year," he warned. Rising economic powerhouse India, struggling with extremist attacks in the financial capital Mumbai, said its economic growth slowed to 7.6 percent in the third quarter of 2008 from 7.9 percent in the second.

While still a respectable performance at a time when many developed economies are in recession, the slowdown in India highlighted the extent to which the US-born financial crisis has spread around the world.

The Russian central bank raised its key refinancing interest rate again to 13 percent from 12 percent on Friday to "lower the level of capital outflows and contain inflationary tendencies." The global economic crisis has prompted investors to pull their cash out of developing economies such as Russia that are still seen harbouring risk, and to transfer it to more established havens.

There was also bad news from South Korea, where industrial production fell 2.3 percent in October in a sign that the export- driven economy was slowing faster than expected. Some analysts see little prospect of a recovery in the current climate of fear and gloom over the global economy. US stocks climbed Friday, however, driven by momentum from strong gains this week inspired by a sense that the credit crisis may be easing.

"The leaders will review progress being made to address the current financial crisis, advance a common understanding of its causes and in order to avoid a repetition, agree on a common set of principles for reform of the regulatory and institutional regimes for the world's financial sectors."

The announcement came as one of Bush's closest allies, British Prime Minister Gordon Brown, acknowledged his country was "likely" entering recession.

"Having taken action on the banking system, we must now take action on the global financial recession, which is likely to cause recession in t Britain, too," Brown said in parliament. Crucial data is expected to show on Friday that the British economy shrank in the third quarter after zero growth in the second. The technical definition of a recession is two straight quarters of negative economic growth.

A similarly gloomy forecast came from Swiss bank UBS, which said Europe faced "inevitable" recession that would begin "almost in sync" with the United States.

The British pound plunged to a five-year trough, closing in New York at 1.6139 dollars. The euro took a pummeling, too, falling below 1.30 dollars for the first time since February 2007 amid interest rate cut expectations.

There were more signs of trouble in emerging markets, with South Africa's rand falling to a six-year low against the dollar. Crude oil prices careened lower after surging US energy reserves highlighted falling demand in a cooling global economy. New York's main contract, light sweet crude for December, skidded 5.43 dollars to close at 66.75 dollars a barrel. In London, Brent North Sea crude for December delivery tumbled 5.20 dollars to settle at 64.52 dollars.

In Canada, the Toronto stock exchange shed 558.92 points, or 5.71 percent, to close at 9,236.68. Gold mining and oil shares led the retreat.

The turbulence came despite fresh attempts by the US Federal Reserve to restore confidence in the fragile financial system, and new evidence that the credit freeze might be thawing, with interbank lending rates showing modest declines.