The United States shed nearly 600,000 jobs in January and German and British industry output plunged the month before, data showed on Friday, while an array of Japanese firms suffered heavy body blows.
Despite the blanket of bad news, stock markets were buoyed by hopes U.S. lawmakers will pass a colossal economic stimulus package which President Barack Obama said was needed urgently to stave off "catastrophe".
If U.S. politicians had any doubt about the parlous state of their economy, official data showed employers slashed 598,000 jobs in January, the deepest payrolls cut in 34 years, propelling the unemployment rate to 7.6 percent.
U.S. stock futures jumped as the grim figures heightened expectations for government intervention to stimulate the economy. European shares gained for the same reason.
"I think these numbers put added urgency to the package in Washington … to get something through now rather than a more balanced package later," said Subodh Kumar, chief investment strategist at Subodh Kumar & Associates in Toronto.
Canada also suffered its worst job losses in over three decades in January as employers cut a record 129,000 workers, pushing the jobless rate to 7.2 percent.
The Democratic-led U.S. Senate will try again on Friday to pass a $937 billion economic package even as moderate lawmakers sought to broker a deal to trim proposed spending.
A group of Democrats and Republicans worked late on Thursday to slice about $107 billion from the plan, which Obama wants on his desk by Feb. 16 to help reverse a downward economic spiral.
Senate Majority Leader Harry Reid said he was "cautiously optimistic" of it passing.
"There are creeping expectations the policy efforts can succeed," said Bernard McAlinden at NCB Stockbrokers in Dublin.
CORPORATE PAIN
A financial crisis that began with a collapse in risky U.S. home loans, devastating the banking sector, has already pushed the United States, the euro zone, Britain and Japan into recession, dragging down many companies with it.
The world's biggest automaker, Toyota Motor Corp, forecast a full-year loss three times bigger than it flagged just six weeks ago as it struggles to cut output fast enough to match evaporating global sales.
Top Japanese bank Mitsubishi UFJ Financial Group booked its first ever quarterly net loss, hit by widening bad-loan costs and losses on stock holdings.
Like Toyota, it further slashed its full-year forecast.
Japanese electronics maker Sharp Corp also swung to a quarterly loss and warned it would post its first ever annual operating loss.
Nor was the corporate pain limited to Japan.
World number two truck maker Volvo slipped to a surprise operating loss and British Airways posted a pretax loss of 70 million pounds ($102 million) for the first nine months of the year. It appeared to be heading for a record quarterly loss in the final three months.
BLEAK Q4
Despite some glimmers of hope in Chinese and euro zone economic activity numbers this week, British industrial output fell at its fastest quarterly rate since 1974 in December, data showed on Friday.
In parallel, German industrial output fell by a record 4.6 percent month-on-month in December and the German steel industry's new orders fell by the most since World War Two in the final quarter of last year.
"Conditions in the German industrial sector are deteriorating at an alarming rate," said Carsten Brzeski at ING Financial Markets.
A German government source said the economy probably contracted by up to 2 percent on the quarter in the final three months of last year, and was down noticeably in the first quarter of 2009.
Bank of Japan (BoJ) Governor Masaaki Shirakawa said slumping exports and weak share prices were taking a heavy toll on the economy and banking system there.
"The worsening of economic activity in the past three months has been very severe," Shirakawa told a parliamentary committee.
Japan's largest brokerage, Nomura Holdings, said on Friday it would raise up to $3.3 billion to replenish a capital base depleted by soured investments and its acquisition of parts of failed U.S. investment bank Lehman Brothers.
