Crumbling home and auto sales pushed three Japanese insurers into merger talks and data from Europe showed the region's economies faced a bleak 2009.
Consumers, investors, central bankers and politicians are hoping to see some signs of recovery next year from the worst downturn since the 1930s as governments pump over $1 trillion into their ailing economies.
However, it looks like being a long haul everywhere.
Reflecting the impact of the deepening global downturn on South Korea, central bank data showed consumer sentiment tumbled to a 10-year low in December as household incomes fell and the jobs market worsened.
In Europe, sentiment among Italian businesses hit the lowest level recorded in a monthly survey dating back to January 1991 and data showed the French economy grew only 0.1 percent in the third quarter.
This year will see one of the biggest ever stock market falls. The U.S. S&P 500 benchmark is down 41 percent with three trading days left in 2008. Its biggest yearly drop was in 1931 during the Great Depression when it fell 47.1 percent.
The fallout has hit all sectors from banks to autos to commodities and resources. Unemployment has climbed, house prices have plummeted and cash-strapped consumers have curtailed spending, heaping more pressure on companies struggling to survive the downturn.
Three big Japanese insurance companies were the latest firms considering a merger to tackle a downturn that has hit demand for car and fire insurance in the world's second-largest economy.
Shares of Mitsui Sumitomo Insurance Group Holdings Inc, Aioi Insurance Co and Nissay Dowa General Insurance Co surged on Monday on hopes that a merger would increase profits and reduce competition.
The three aim to reach a basic agreement by March 2009, a company source said, which would produce the country's largest non-life insurer.
YEN SURGE
A surging yen also provided another motivation for a merger, analysts said, because it has eroded the value of the insurers' foreign-currency assets.
Yen strength has prompted official concern, underscored on Monday by Finance Minister Shoichi Nakagawa, who told the Financial Times that he was watching volatility in the foreign exchange market with alarm.
The yen has surged more than 18 percent against the U.S. dollar this year, slamming Japanese exporters like Toyota and Sony and triggering speculation the government may intervene to halt the currency's rally.
"Every day I am looking at the market developments with a sense of alarm and urgency," the paper quoted Nakagawa as saying in reference to yen volatility in an interview.
On the currency markets, the British pound fell to a record low against the euro and a basket of currencies on Monday, hit by the view that the Bank of England will need to cut rates further to support its economy. Oil prices rose above $40 a barrel on Monday, up nearly 8 percent on the previous session, after violence between Israel and Hamas served as a reminder of tensions that could threaten crude supplies from the Middle East.
Oil is on track for a nearly 60 percent loss this year, the biggest annual fall since futures began trading 25 years ago.
Israeli aircraft attacks on the Gaza Strip have killed more than 300 Palestinians, enraging Arabs across the Middle East and highlighting the risk, however remote, that the conflict could threaten oil supplies from the region.
SILVER LINING?
Defying the gloom, German Finance Minister Peer Steinbrueck said on Monday he saw some positives for Germany as a result of the economic crisis.
Steinbrueck told the Hannover-based Neue Presse newspaper that petrol prices and inflation were falling and real disposal incomes were therefore rising.
"Fortunately, there have also been some positive developments," Steinbrueck told the Hannover daily. "Petrol prices are declining…Inflation rates have fallen. Real disposal incomes are rising."
Steinbrueck's comments came as German retailers reported a strong Christmas sales season that could surpass last year's turnover despite the onset of the economic downturn.
