More countries seek help, banks struggle: IMF

Japan’s economy minister said recession in the world’s second-biggest economy could last longer than feared. Measures of inflation fell sharply in the United States and Britain, paving the way for further interest rate cuts.

A decision by Ford Motor Co. to sell its controlling interest in Japan’s Mazda Motor Corp illustrated the alarm gripping America’s auto industry and the impact of U.S. troubles on economies well beyond its frontiers.

The banking sector, seat of a crisis now inflicting a sharp slowdown across the globe, also showed the strain. Britain’s Barclays altered fund-raising plans to quell shareholder anger and profits in Japan’s largest bank tumbled.

The crisis has spread steadily in recent weeks beyond the major developed countries, with states from Ukraine and Iceland to Pakistan seeking help from the IMF.

“It is true to say that because of globalization the amount which the IMF is asking for is increasing, and increasing rapidly, and the list of countries asking for some support is increasing every day,” IMF Managing Director Dominique Strauss-Kahn told a news conference on a visit to Libya.

He said earlier this week his organization was likely to need at least US$100 billion in extra funding over the next six months in order to help countries out of the mire.

The deepening economic gloom prompted shares to slide.

U.S. stock futures pointed to a weak start on Wall Street. European shares fell 1.2 percent and Japan’s Nikkei shed 2.3 percent.

Barclays, facing shareholder ire following a decision to take 5.8 billion pounds from Middle East investors on terms tougher than the British government offered, canceled this year’s executive bonuses, as U.S. investment bank Goldman Sachs and Swiss bank UBS have done.

It also said Qatar Holding LLC and Sheikh Mansour Bin Zayed Al Nahyan would each make up to 250 million pounds (US$372.9 million) of reserve capital instruments available to existing shareholders — effectively offering the prospect of enjoying some of the higher rates of return agreed to Gulf investors.

Barclays, one of the four biggest UK banks, had declined to accept any capital from the government under a 37 billion pound bailout, wary of conditions imposed on their operations.

Japan’s biggest bank, Mitsubishi UFJ Financial Group, announced first half profit had tumbled 64 percent and stuck to its recently lowered full-year forecast.

Australia’s biggest investment bank, Macquarie Group, said it was heading for its first fall in annual profit in 17 years.

HSBC added to the employment gloom, saying it would cut a further 500 staff in Asia, mostly in Hong Kong, due to deteriorating economic conditions and caution about next year.

Citigroup Inc, the second biggest U.S. bank, revealed plans on Monday to cut 52,000 jobs by next year, the second-largest corporate lay-off plan in history.

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