Crisis may bottom yet recession fears rise: analysts

By Walden Siew

NEW YORK (Reuters) - A year-long global credit crisis may hit bottom soon, but the threat of more banking losses and slower growth for global economies is mounting, senior Wall Street analysts said on Friday.

U.S. and European bank write-downs and losses will likely stretch out to 2009, expanding beyond problem mortgages to other forms of consumer credit, Deutsche Bank chief U.S. economist Peter Hooper told Reuters in a telephone interview.

That in turn may lead to slow growth and possible recession in the United Kingdom, Canada and continental Europe as rising inflation and high oil prices rein in U.S. consumer spending, a senior Lehman Brothers Inc strategist said separately.

"The UK is on the precipice of a recession, Canada is on the precipice, and the same thing for New Zealand and the euro zone," said Jack Malvey, Lehman's chief global fixed-income strategist, in another telephone interview. "You look around the planet, and the next thing is not some exotic instrument. It's a classic consumer-led economic deceleration."

High energy prices will continue to put the squeeze on U.S. consumers, dragging on global growth prospects, he said.

"This is a late-decade credit methodology purification," said Malvey, who expects the credit cycle may bottom in October after the release of more earnings results.

A "credit recession" due to the U.S. housing market downturn may last more than two years, Malvey said last month.

Still, Lehman forecasts that oil prices have peaked and may fall to $90 per barrel by the end of the first quarter of 2009.