Asian economies stumble and U.S. faces retail test

By Lewis Krauskopf

NEW YORK (Reuters) - U.S. shoppers awoke early for post-Thanksgiving sales on Friday in a key test of the country's ability to withstand economic turmoil as sharp production declines in Asia gave fresh evidence of the global crisis.

Fighting wore on in India's commercial capital, Mumbai, where Islamist militants launched attacks on Wednesday, while unrest in Thailand also underlined the political risks facing emerging markets already grappling with economic disarray.

U.S. retailers opened early and offered steep discounts on the day after Thanksgiving known as "Black Friday," hoping for a strong start to a holiday shopping season that experts predict may be the worst since the early 1990s.

"If you don't get a good Black Friday start, you've got an awful lot of ground to make up," said Marshal Cohen, chief retail analyst with NPD Group.

In Europe, data showed inflation falling sharply and a steeper rise in unemployment than predicted -- factors that raise pressure on the European Central Bank to cut interest rates substantially next week.

The shake-up of European banks continued as the British government acquired a majority stake in Royal Bank of Scotland and Germany's Commerzbank accelerated its takeover of Dresdner Bank.

Chinese insurer Ping An provided a striking example of the turmoil's global nature when, a government source said, it asked China's government to help seek compensation from Belgium over losses in European financial group Fortis.

The worst economic woes in decades also took more casualties beyond the financial sector, as Franco-Italian chipmaker STMicroelectronics cut its fourth-quarter outlook and German industrial conglomerate ThyssenKrupp warned it does not expect to reach its long-term financial targets.

The U.S. benchmark Dow Jones industrial average closed 1.2 percent higher while other major U.S. indices rose as markets closed early for the holiday weekend. European shares also rose. Japan's Nikkei ended up 1.7 percent.

BLACK FRIDAY SALES

Many are looking for economic signals this weekend from the United States, where the crisis began with a collapse in the U.S. mortgage market that saddled banks throughout the world with bad debt.

Black Friday sales provide a strong gauge of consumer confidence, a major driver of the U.S. economy, as the run-up to Christmas nets up to 40 percent of retailers' annual sales.

Shoppers rose before dawn to peruse bargains at stores from Wal-Mart to Macy's Inc and Best Buy Co Inc, some opening at 4 a.m. (0900 GMT) to lure bargain hunters.

But store traffic appeared about 25 percent lighter than a year ago, a top retail analyst said. The Standard & Poor's Retail index fell 1.6 percent.

Consumers are cutting spending on nearly everything but necessities as they endure a housing slump, mounting job losses and the credit crunch.