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Recession alarm rings around the world

Even a 1.5 million barrel a day production cut by OPEC failed to stop oil prices falling amid fears of a deep global recession.

Grim news backing those fears came from around the world.

China, Japan and 11 other Asian nations agreed to set up an 80-billion-dollar war fund to fight what ex-US Federal Reserve chief Alan Greenspan called a ‘once-in-a-century credit tsunami’.

French auto giants PSA Peugeot-Citroen and Renault ordered huge production cuts, while Japan's hi-tech giant Sony Corp. and Europe's biggest airline Air France-KLM issued profits warnings.

In Britain, official figures confirmed the country was about to enter a recession while Turkey's central bank took action to strengthen bank liquidity and prop up the slumping currency.

The combined impact sent shares tumbling in both Asia and Europe after overnight falls in Wall Street.

Japan's Nikkei index plunged 9.60 percent, ending below the key 8,000-point level for the first time in more than five years, and Hong Kong fell 8.3 percent.

French shares plummeted 10.62 percent in morning trade to their lowest point in over five years before rallying slightly while Frankfurt's DAX 30 index slumped 10.13 percent and London's FTSE 100 index by more than nine percent.

‘The best word to describe what's going on right now is panic,’ said Credit Suisse strategist Satoru Ogasawara.

Technology giant Sony, a bellwether of corporate Japan, saw its shares plunge more than 11 percent after forecasting net profit of 150 billion yen (1.55 billion dollars) for the year to March, down 59 percent on last year.

South Korea's Samsung Electronics, the world's largest memory chip maker, also reported a 44 percent fall in third-quarter net profit.

Air France-KLM suffered a near nine-percent drop in its share price after acknowledging it would be ‘very difficult’ to meet its billion-euro (1.28-billion-dollar) earnings target.

Europe's biggest airline unveiled a plan to cut costs by up to 1.2 billion euros over the next five years.

The suffering extended to the auto industry with Renault ordering almost all French plants closed for at least one week and shorter shutdowns in Turkey, Russia and Slovenia.

PSA Peugeot-Citroen chairman Christian Strieff said he had ordered ‘massive’ production cuts as the group forecast a 17-percent fall in car sales in Western Europe in the fourth quarter.

Company officials confirmed the slowdown would amount to a 30 percent production cut and plants in France would lose between two and 16 days of work each in the last three months of 2008.

There would also be cut-backs at Peugeot's sites in Madrid and Vigo in Spain and at Trnava, in Slovakia, they said.

ArcelorMittal, the world's biggest steel producer, also decided to shutsmelting furnaces on a temporary basis in France, Germany and Belgium, according to union chiefs who met with management.

New figures showed industrial confidence in both France and Italy had fallen to the lowest level since 1993.