LONDON - A NEW set of grim figures pointed to a deepening downturn in Europe on Monday after officials painted a sombre picture for Japan and a top auto chief warned of 'massive' job losses in the vehicle industry.
'Job destruction will be massive in those countries that do not rapidly help the auto sector to finance itself,' said Carlos Ghosn, who turned Nissan around a decade ago. -- PHOTO: ASSOCIATED PRESSShare prices fell in opening European trade after a mixed performance in Asia, with investors on edge ahead of US manufacturing data later in the day that could show the world's largest economy sinking further.
Data released on Monday also showed sharp slowdowns in the eurozone's key manufacturing sector.
Central banks were meanwhile poised to take further action against the gathering gloom, with interest rate cuts expected later in the week in Britain, the eurozone, Australia and New Zealand.
The Japanese central bank is also preparing new measures to tackle a worsening credit crunch as officials warned the country could slip back into deflation next year.
'There will be a plethora of bad news on economic growth so central banks will need to act boldly to prevent sentiment hitting rock bottom once again,' warned NAB Capital analyst John Kyriakopoulos.
'What is unclear is whether investors react by thinking that aggressive rate cuts will help revive economies down the track or conclude that they indicate economic conditions are even worse than thought,' he added.
With the US auto sector teetering on the brink of collapse the heads of the US Big Three - General Motors, Ford and Chrysler - were to return to Congress on Wednesday and Friday to plead for a 25-billion-dollar rescue package.
Unless their auto industries receive fresh government help, countries around the world could face huge job losses, the head of auto giant Renault-Nissan warned.
'Job destruction will be massive in those countries that do not rapidly help the auto sector to finance itself,' said Carlos Ghosn, who turned Nissan around a decade ago.
'It will not be seen immediately, but in a few years,' he told a symposium in Japan.
The global slowdown has badly shaken auto makers in Japan, where sales of new cars plunged 27.3 per cent in November to 215,783 vehicles, the lowest since 1969, the Japan Automobile Dealers Association said.
Fresh data released on Monday also revealed bleak prospects in Germany and France.
German retail sales plunged by 1.6 per cent in October from the previous month, preliminary figures showed, catching analysts by surprise and underscoring by how much consumers are tightening their belts in Europe's biggest economy.
Analysts polled by Dow Jones Newswires had forecast a gain of 0.7 percent.
Germany fell into recession in the third quarter of the year, and economists expect it to last well into 2009.
'Germany is in the grip of a recession which will probably be more severe than widely expected,' Commerzbank analyst Simon Junker said.
'Private consumption does not appear strong enough to alleviate the recession in Germany or bring it to an early end,' he added.
In France a closely watched index of manufacturing activity fell to 37.3 in November, its worst-ever reading.
Across the 15-nation eurozone, of which Germany and France are part, manufacturing activity also hit a record low, with the relevant index falling to 35.6 points last month, the Markit research group reported.
Denmark appeared headed back toward a new recession as its economy contracted 0.5 per cent in the third quarter after briefly flirting with growth a quarter earlier, according to Statistics Denmark.
Denmark became the first European country to enter recession after its economy contracted for two consecutive quarters - at the end of 2007 and in the first three months of this year.
Earlier in the day the head of the Japanese central bank, Masaaki Shirakawa, said Japan's economy 'is likely to continue to show increased sluggishness over the next several quarters,' warning that consumer prices may start to fall again 'for a brief period' in the next fiscal year.
Kaoru Yosano, the economics minister, also said Japan could slip back into deflation, which cuts into corporate profits and deters consumers from spending because they think they can find even cheaper prices in the future.
'I cannot tell you it will be a bright next day,' he told the Financial Times in an interview published Monday.
'We are moving to the next phase of shrinking consumption - some call it deflation - production going down and prices going down.' European stock markets faltered in early trading, with London shedding 1.48 per cent, Paris 1.41 per cent and Frankfurt 1.64 per cent.
Asian stock markets closed with mixed fortunes. Hong Kong rose 1.6 per cent and Shanghai 1.25 per cent while Tokyo lost 1.35 per cent and Sydney 1.6 per cent. -- AFP
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