NEW YORK (Reuters) - Fresh signs of economic weakness from China, Japan and Britain reinforced fears of a prolonged recession, and U.S. President-elect Barack Obama urged the Bush administration to back a second economic stimulus package and aid the ailing auto industry.

Oil, which is heavily dependent on global growth, tumbled 5 percent to $59 a barrel after touching a 20-month low of $58.32. World stock and other commodity prices also fell, with U.S. stocks closing 2 percent lower.

Shares of U.S. automaker General Motors fell as much as 15 percent to lows last seen during World War Two before closing down 13 percent for the day.

"Reality is setting in that we are in a recession. It's almost like an endless abyss for the market -- it's sell first, ask questions later," said Ryan Detrick, technical analyst at Schaeffer's Investment Research in Cincinnati, Ohio.

In an effort to reverse a wave of defaults threatening the U.S. economy, the regulator for Fannie Mae and Freddie Mac, the two largest U.S. mortgage finance companies, unveiled a plan to cut payments for struggling homeowners.

U.S. homeowners who face foreclosure and are spending more than 38 percent of their income on mortgage payments could have monthly payments reduced by Fannie and Freddie, which own or insure roughly half of U.S. home loans. The move could provide relief for hundreds of thousands of borrowers.

The widening global slowdown has prompted a rash of corporate profit warnings and led some companies to warn about their ability to operate in the darkening environment.

Obama urged President George W. Bush to back a second stimulus package and asked him to use existing bailout measures to help an auto industry battered by a rapid drop-off in sales, an aide said.

A spokeswoman for Obama said he raised the issue in his meeting with Bush at the White House on Monday.

The White House said it was open to considering any proposals from Congress to accelerate loans to the U.S. auto industry from funds already appropriated.

U.S. House of Representatives Speaker Nancy Pelosi threw her weight behind an automobile industry rescue plan, saying aid was urgent and that she was confident Congress could act on emergency bailout legislation next week.

Evidence of a global slowdown was ample as the worst financial crisis in 80 years, arising from huge banking losses in the slumping U.S. housing market, has sown a broad economic downturn. Even fast-growing China has not been immune.

Chinese import growth slowed in October and inflation fell to a 17-month low as domestic demand cooled, raising the likelihood Beijing will soon cut interest rates to back up the government's new economic stimulus plan.

In Japan, exports fell nearly 10 percent in the first 20 days of October, corporate bankruptcies jumped 13.4 percent year-on-year and sentiment in its service sector hit an all-time low -- all signs the world's second-biggest economy was teetering on the brink of recession.

German analyst and investor sentiment about the outlook for Europe's largest economy improved but remained gloomy with the nation probably already in recession.

British retail sales fell by the biggest amount in more than three years in October, and a housing industry survey showed home sales slumped to their lowest level in at least 30 years.

SUMMIT HOPES

Investors are looking to a summit of world leaders in Washington on Saturday for new solutions, following moves worldwide to cut interest rates, free up seized money markets and recapitalize banks, at a cost of more than $4 trillion.

"We need monetary and fiscal policy coordination across the world ... a broad, concerted economic response is now urgent," British Prime Minister Gordon Brown told a news conference. "The second priority is that we agree a timetable for measures that will clean up the failings in our banking system.

But officials are playing down the likelihood that the weekend meeting will produce dramatic measures, and aides to Obama -- whom world leaders have urged to make the credit crisis his No. 1 priority -- said he would not attend.

Brown said there could be no retreat into protectionism and that he was confident Obama shared that view.

CORPORATE PAIN

The hard times have prompted a number of companies to issue profit warnings. Among the latest:

U.S. industrial conglomerate Tyco International Ltd and diversified U.S. manufacturer Rockwell Automation Inc both warned that fiscal-year profits would be well below Wall Street forecasts. Tyco's shares fell 13 percent, and Rockwell's 8 percent.

Vodafone, the world's largest mobile phone company by revenues, cut its full-year revenue outlook for the second time in four months but said it would maintain profits by cutting 1 billion pounds ($1.58 billion) of costs.

The world's largest hotelier, InterContinental Hotels, posted a 14 percent rise in third-quarter profits but said it saw a sharp deterioration in October market conditions.

General Growth Properties Inc, the second-largest U.S. mall owner, expressed doubts that it could continue to operate due to $4.2 billion in debt coming due November 28 and next year. Its shares plunged to about 40 cents, down more than 99 percent over the past year.

Rona Inc, Canada's biggest home-improvement chain, reported a lower third-quarter profit due to a slump in construction and home renovation, and warned that it might not meet its profit targets.

(Editing by Elizabeth Piper, Steve Orlofsky, Gary Hill)

By Herbert Lash

Publié le 11 novembre 2008 Copyright © 2008 Reuters