NEW YORK The U.S. economy hemorrhaged more than half a million jobs in November, data showed on Friday, sending stocks lower on both sides of the Atlantic and hammering currencies from Europe to Latin America.
Canada also absorbed more job losses last month than at any time since 1982, while Germany approved a stimulus package aimed at helping Europe's biggest economy weather what some fear may be its worst recession since World War II.
The biggest blow, though, came from the United States, where employers last month axed 533,000 jobs, the most for any month since 1974 and nearly 200,000 more than economists expected. The jobless rate hit 6.7 percent, the highest since 1993.
"These are horrendous numbers ... This is an economy that is in absolute free-fall right now. Confidence has collapsed," said Nigel Gault, chief U.S. economist at Global Insight.
Market reaction was swift: U.S. and European stocks tumbled, oil fell and the dollar neared a 13-1/2-year low against the yen. The euro also weakened, while emerging market currencies such as Brazil's real fell sharply.
So far in 2008, the U.S. benchmark S&P 500 index is down 43.5 percent, leaving it on track for its worst year since 1931, during the Great Depression.
With many developed countries either in recession or heading there, major central banks have cut interest rates sharply in the past week and attention is now focused on what happens if they drop to zero.
U.S. interest rate futures after the monthly jobs data were pricing in a half-percentage-point rate cut when the Federal Reserve meets later this month. That would take the benchmark rate to 0.5 percent, lower than it has ever been.
The U.S. economy fell into a recession a year ago and economists fear rising layoffs may keep it there well into 2009.
RGE Monitor economist Arpitha Bykere said he expects the U.S. economy to shrink 4.5 percent in the fourth quarter and by a similar amount over the first three months of next year.
"We don't see an economic recovery in 2009," he said.
The news also bode poorly for the holiday shopping season.
"There are less people working, and so less people buying," said Michael Kastner, head of taxable fixed income at Sterling Stamos Capital Management in New York. "We're in the holiday season and it means sales will be below expectations. The season will be awful."
Global sales at BMW, the world's top premium carmaker, plunged by a quarter in November, and Honda backed out of Formula One motor racing, vividly demonstrating the problems facing the auto industry.
"ROBUST" CHINA-U.S. TALKS
With the global economy on life support, the United States and China wrapped up two days of often tense talks in Beijing.
The Americans fretted that China might be losing the stomach to let its currency rise in value and China worried about Washington's management of the world's largest economy -- in which China has a huge financial stake.
U.S. Treasury Secretary Henry Paulson described the talks as "robust" and characterized by "straightforward back-and-forth" exchanges.
Assistant Chinese Finance Minister Zhu Guangyao, asked whether Beijing would keep buying U.S. debt, responded by urging Washington act to protect China's financial interests.
Among the few concrete results from the meeting, the governments agreed to make an extra $20 billion of credit available to finance U.S. and Chinese exports to developing countries that are struggling to get access to trade credit.
TAX CUTS, SPENDING HIKES
The fate of the Big Three U.S. automakers -- General Motors Corp, Ford Motor Co and Chrysler -- remained high on investors' list of concerns, as bankruptcy would rattle a chain of parts suppliers and financiers across the globe.
The industry's drive for a $34 billion taxpayer bailout was stuck in neutral on Friday as executives of the three companies began a second day of testimony on Capitol Hill.
President George W. Bush on Friday urged Congress to act on a plan that would help the carmakers restructure, adding that he was worried about their viability.
In Germany, the upper house of parliament approved a $31 billion euro ($39.6 billion) package to boost Europe's biggest economy, though critics said it was not radical enough.
Recent data showed German manufacturing orders plunged in October after a record decline the prior month, stoking fears that the country faced its worst recession since World War II.
The International Monetary Fund has bailed out several developing countries, with Turkey expected to seek a $25 billion loan agreement, government sources told Reuters.
TO ZERO AND BEYOND
Policy-makers have worried that interest rate cuts are not having the impact they should because banks are not passing them on or lending freely.
To supplement them, the Bank of England is considering buying government debt to flood markets with cheap cash, an unsourced report from The Daily Telegraph newspaper said.
Federal Reserve watchers expect the U.S. central bank to cut its key federal funds rate to zero by January and to pump more cash into markets, echoing efforts by Japan to revive its economy in the 1990s.
Asked about quantitative easing of monetary policy, ECB President Jean-Claude Trichet said on Thursday: "If new decisions are needed we will take new decisions."
(Additional reporting by Reuters bureaus worldwide; Editing by Dan Grebler)
(firstname.lastname@example.org; +1 646 223 6346; Reuters Messaging: email@example.com))