LONDON (Reuters) –
German unemployment rose more than expected, Japanese firms felt more pain from the financial crisis and a big Russian bank said on Thursday its worst case scenario was that 10 percent of its loans were bad.
Signs of global corporate distress underlined the need for dramatic responses as U.S. President Barack Obama's $825 billion fiscal stimulus plan passed through the House of Representatives on Wednesday.
It marked the first legislative boost to his presidency, but showed the depth of partisan divisions as, despite an Obama charm offensive, every Republican vote opposed the bill. The Senate is expected to approve a similar version.
In Japan, Sony Corp followed fellow electronics maker Canon Inc with a dismal profit report. It fell into the red in the latest quarter and reiterated its forecast for a record annual loss due to sliding demand and a stronger yen, while rival Nintendo Co cut its full-year outlook for the second time in three months.
Nippon Steel, the world's second-biggest steelmaker, cut its 2009 net profit forecast by 36 percent on weaker demand for everything from household appliances to cars.
Electronics group Toshiba Corp said it planned to cut costs by $3.3 billion next business year by slashing capital spending and contract jobs.
"UNCERTAINTY REMAINS HIGH"
Fallout is still growing from a crisis that has already cost trillions of dollars and threatens millions of jobs.
German unemployment rose in January by 56,000 month-on-month in seasonally adjusted terms, compared with a mid-range forecast in a Reuters poll of 37 economists for a rise of 30,000.
The unadjusted jobless total rose to 3.489 million.
Bank of Japan Deputy Governor Kiyohiko Nishimura told business leaders: "Governments and central banks are acting promptly, but uncertainty over the outlook for the global economy, as well as the financial crisis in the United States and Europe, remains high."
He added: "It's not certain whether the measures taken up till now are enough." Nishimura said he expected the Japanese economy, widely expected to be entering its longest recession in modern times, to start recovering from October.
The U.S. Federal Reserve said on Wednesday it was prepared to buy long-term Treasury bonds if that would help improve credit market conditions. But U.S. government debt prices fell sharply as investors were disappointed that the Fed did not make a firm commitment to buy bonds.
Bond purchases could help to lower mortgage rates and curb the housing downturn at the heart of the global crisis. The U.S. central bank held its main interest rate in a range between zero and 0.25 percent and said the rate could stay unusually low for some time.
In Wellington, New Zealand's central bank slashed rates by 1.5 percentage points to a record low 3.5 percent
NIKKEI UP, EUROPE DOWN
Japan's Nikkei stock average closed 1.8 percent higher, boosted by exporters such as Honda Motor Co., gaining on a softer yen, and mirroring the generally positive response to Obama's stimulus package and other measures.
European stocks were lower, however, with the FTSEurofirst index down 1.57 percent at 0933 GMT.
There were new signs of the depth of the crisis in Russia. The head of its second-largest bank, VTB, said non-performing loans totaled about 3.8 percent but the bank was allowing for a "worst-case scenario up to 10 percent."
CEO Andrei Kostin said VTB might issue preference shares later this year as part of a 200 billion rouble ($6 billion) state recapitalization.
And the head of state corporation VEB, entrusted with distributing $50 billion of state money to help Russian companies refinance their foreign debts, said companies had made bids for around $90 billion.
Speaking in Davos on Wednesday, Russian and Chinese leaders took swipes at the United States as they blamed the global crisis on debt-fueled consumption.
"The existing financial system has failed," Russian Prime Minister Vladimir Putin said. Chinese Premier Wen Jiabao blamed "the blind pursuit of profit."
(Editing by Kevin Liffey)