GLOBAL ECONOMY-European economy buckling, Japan falters

* European business confidence buckles -- falls in France, Italy, Germany and across 15-member euro zone

* Biggest fall in German business confidence since 9/11

* UK retail sales in biggest monthly fall on record

* Swedish, Spanish unemployment rates soar

* BOJ official warns Japan may slip into recession

By Ross Finley

LONDON, July 24 (Reuters) - European business confidence is rapidly unravelling and Japanese exports shrank last month, data showed on Thursday, giving evidence that the credit crisis has shifted from battering bank balance sheets to the world economy.

Key measures of business activity and company sentiment across Europe fell more than expected -- in Germany, France and Italy as well as a closely-watched survey of the 15-nation euro zone.