NEW YORK/LONDON–Investors anxiously awaited today's reopening of North American markets after last week's worldwide slide in stock prices and currency collapses on increasing fears of a deep global recession.
While governments and central banks are expected to take further action to prop up banks and restart money markets, there is concern it will not be enough to prevent companies from cutting jobs as sales get hit and financing remains difficult.
Governments have so far pledged about $4 trillion (U.S.) to try to stem the crisis. In the latest intervention by authorities, the International Monetary Fund yesterday agreeed to loan Ukraine $16.5 billion. Ukraine's Finance Ministry said the loan would help shore up the country's flagging economy.
Other such rescue moves are expected from the IMF this week.
Central banks are likely to launch new co-ordinated emergency action this week to calm panic in financial markets. The U.S. Federal Reserve is expected to cut its overnight rate by 50 basis points.
Advance U.S. economic data is expected to show gross domestic product contracted 0.5 per cent in the third quarter after growing 2.8 per cent the previous quarter.
"Increasingly, the signs point to a deep and synchronized global recession," JPMorgan economist Bruce Kasman said.
Austrian bank Kommunalkredit said it started talks with the Finance Ministry to ensure the bank's liquidity. Reports said talks focused on the possibility of the state acquiring part of the bank.
Asian and European leaders closed ranks over the weekend to bolster confidence among investors facing the worst financial crisis in 80 years.
China's central bank governor, Zhou Xiaochuan, said yesterday Asia's second-largest economy was in good condition but needed to be on guard to fend off risks.
Japanese Economics Minister Kaoru Yosano said the government should increase its bank bailout plan to around 10 trillion yen ($106 billion) from two trillion.
