U.S. automakers seek plan; Europe looks to bolster banks

"The message for the ECB is clearly: don't worry about inflation, cut now, and a lot. I would say 75 basis points, it's a minimum," Bank of America economist Holger Schmieding said.

In Brussels, EU Competition Commissioner Neelie Kroes, facing pressure from member states to approve state aid to ailing banks, said the EU executive would approve new rules shortly.

Kroes said after meeting EU finance ministers that the Commission expected banks that received state aid to give commitments to the funds to increase lending.

Finance ministers from all 27 EU nations had gathered in Brussels to discuss a proposal for governments to spend an extra 1.2 percent of GDP from their budgets to boost investment and consumer demand.

German Finance Minister Peer Steinbrueck said Berlin, Paris and other EU capitals were unhappy with the Commission approach to vetting state aid to banks.

The Commission said proposed German assistance for Commerzbank did not meet EU rules on state aid.

The ministers agreed to increase the capital of the European Investment Bank (EIB), the EU's lending arm, by 67 billion euros (US$84.7 billion), the EIB's president said.

In Asian markets, Japan's Nikkei average tumbled 6.4 percent as the yen surged. Hong Kong's Hang Seng index lost 5 percent.

BANKERS' BLUES

Britain's construction sector shrank last month at its fastest pace in more than a decade, a survey showed on Tuesday, building pressure on the Bank of England to cut rates by at least another percentage point on Thursday.

The pain also reached deeper into the workplaces of big financial players.

Switzerland's Credit Suisse AG will cut 650 jobs and Britain's HSBC said it was cutting 500 as the worst financial crisis since the 1930s continues to bite.

Around 90,000 jobs have been axed at major global banks since September.

The Wall Street Journal reported Goldman Sachs was likely to report a net loss of as much as US$2 billion for the fourth quarter, its first loss as a publicly listed company. (Additional reporting by Reuters bureaus worldwide; Writing by Angus MacSwan; Editing by Tom Hals)

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