* China inflation, trade data show domestic slowdown
* UK sales tumble, Japan exports drop
* Focus on Nov. 15 summit, EU says trade deal within reach
* Japanese and European shares drop 3 pct, Wall St to slide
(For more on the financial crisis click on [nCRISIS]
By Mike Peacock
LONDON, Nov 11 Weak economic readings from
China, Japan and Britain and a grim corporate outlook worldwide
reinforced fears on Tuesday of a prolonged recession, prompting
investors to look to a world leaders' summit for solutions.
Chinese import growth slowed in October and inflation fell
to a 17-month low as domestic demand cooled, raising the
likelihood Beijing will cut interest rates soon to back up the
government's new economic stimulus plan. [ID:nSP418906]
In Japan, exports fell nearly 10 percent in the first 20
days of October, corporate bankruptcies jumped 13.4 percent
year-on-year and sentiment in its service sector hit an all-time
low, all signs the world's second biggest economy was teetering
on the brink of recession. [ID:nT357522]
German analyst and investor sentiment about the outlook for
Europe's largest economy improved but remained gloomy with the
nation probably already in recession.
The ZEW survey, which measures the ratio of optimists to
pessimists, rose but still read -53.5, reflecting a large
preponderance of the latter. [ID:nLB189792]
British retail sales fell by the biggest amount in more than
three years last month, and a housing industry survey showed
home sales slumped to their lowest level in at least 30 years.
"These are seriously poor numbers, especially in the run-up
to Christmas," Stephen Robertson, director general of the
British Retail Consortium, said of the sales data. [nLAG003112]
The worst financial crisis in 80 years, prompted by huge
banking losses in the U.S. housing market, has now fostered a
broad economic downturn, with even fast-growing China proving
not to be immune.
Investors are looking to a summit of world leaders in
Washington on Saturday for new solutions, following moves
worldwide to cut interest rates, kickstart money markets and
recapitalise banks, at a cost of more than $4 trillion.
"We need monetary and fiscal policy coordination across the
world ... a broad, concerted economic response is now urgent,"
British Prime Minister Gordon Brown told a news conference. "The
second priority is that we agree a timetable for measures that
will clean up the failings in our banking system."
But officials are downplaying the likelihood of dramatic
measures and aides to U.S. President-elect Barack Obama -- who
world leaders have urged to make the credit crisis his number
one priority -- said he would not attend the Nov. 15 summit.
Many in Europe want a root-and-branch reform of financial
regulation but others have sounded more reluctant.
The EU's top trade official, however, said a growth-boosting
deal on the Doha round of trade talks could be struck within
weeks and the summit should fall fully behind it.
"It's very important that the G20 meeting in Washington on
15 November sends a clear signal to negotiators to achieve this
objective," European Trade Commissioner Catherine Ashton said
after meeting her U.S. counterpart Susan Schwab.
A European Commission statement quoted Schwab as saying
world powers must seek "an ambitious and balanced Doha round
that creates new trade flows and generates economic
opportunities worldwide". [nLB262882]
Brown said there could be no retreat into protectionism and
that he was confident Obama shared that view.
On the home front, Obama is expected to spend hundreds of
billions of dollars in a fiscal stimulus package, once he takes
power in January.
Separately, the regulator for Fannie Mae FNM.N and Freddie
Mac FRE.N, which guarantee nearly half of all U.S. residential
mortgages, will announce on Tuesday new steps to mitigate home
loan foreclosures, according to sources familiar with the plans.
Inevitably, companies are not escaping unscathed.
Vodafone (VOD.L), the world's largest mobile phone company
by revenues, cut its full-year revenue outlook for the second
time in four months but said it would maintain profits by
cutting 1 billion pounds ($1.58 billion) of costs. [nLA322360]
Samsung Securities Co (016360.KS), South Korea's biggest
brokerage, reported a 69 percent fall in quarterly net profit on
the back of falling financial markets. [nSEO154892]
The world's largest hotelier, InterContinental Hotels
(IHG.L), posted a 14 percent rise in third-quarter profits but
said it saw a sharp deterioration in October market conditions.
Japan's Nikkei .N225 and European stocks shed 3 percent
and U.S. stock futures pointed to a weak start on Wall Street in
response to the worsening corporate outlook.
Monday's optimism, sparked by China's nearly $600 billion
stimulus package, quickly evaporated.
"Worrying corporate news from the U.S. plus suggestions that
the recession will be longer and deeper than previously thought
are adding to the downside," Matt Buckland, dealer at CMC
Markets, wrote in a note.
Deutsche Bank said the equity value of General Motors (GM.N)
was now zero, sending its stock to a 62-year low, and analysts
said Goldman Sachs (GS.N) could post its first quarterly loss.
U.S. electronics seller Circuit City CCTYQ.PK filed for
bankruptcy and coffee chain Starbucks' profits tumbled.
(editing by Elizabeth Piper)