Obama urges action on stimulus as job losses mount

US President Barack Obama urged action on a $900 billion stimulus bill before Congress to stave off "catastrophe", as a surge in the number of new jobless benefit claims painted a picture of an economy in deep recession.

Hopes that the US government will make new moves to shore up the battered financial system boosted Asian stocks yesterday, but the prospect of more grim jobs data from the US later in the day pushed the dollar lower.

In a dramatic illustration of the impact the global downturn is having on consumption, Toyota Motor Corp., the world's biggest car maker, said it expected its full-year loss would be three times what it flagged just six weeks ago.

In Australia, one of the few developed nations not officially in recession, the central bank, in a major downgrade, predicted the economy would barely grow at all this year.

"If we do not move swiftly to sign the American Recovery and Reinvestment Act into law, an economy that is already in crisis will be faced with catastrophe," Mr Obama said during a meeting with lawmakers from his Democratic Party in Virginia.

A financial crisis that began with a collapse in risky US home loans, devastating the banking sector, has pushed the United States, the eurozone, Britain and Japan into recession.

Central banks worldwide have cut interest rates sharply to stimulate demand after mass layoffs and factory closures, with the Federal Reserve and Bank of Japan pushing rates to near zero in recent months.

In the latest cut, the Bank of England slashed its benchmark rate by half a percentage point to one percent on Thursday, the lowest since the central bank was created more than three centuries ago.

Underlining the economic fallout of the crisis, the number of Americans filing for first-time unemployment benefits last week hit its highest level since late 1982.

"It's pretty ugly," Boris Schlossberg, director of currency research at GFT Forex in New York, said after the US job benefits figures were released on Thursday, adding that it "goes to show that the economy is convulsing and contracting".

Bank of Japan Governor Masaaki Shirakawa also acknowledged the pressures on the world's second-biggest economy, saying yesterday that the last three months had seen exports falling rapidly and corporate financing conditions tightening.

"We see economic conditions as being very severe," Mr Shirakawa told a parliamentary budget committee.

Although not in recession, the Reserve Bank of Australia said yesterday the Australian economy would barely grow this year with a rise in gross domestic product of just 0.5 per cent. That marks a sharp cut from 1.75 per cent predicted in November.

It said unemployment was likely to rise significantly from the current 4.5 per cent level, which is well below the 6.5 per cent average for the 30-nation Organisation for Economic Cooperation and Development.

Two of the country's biggest banks, National Australia Bank and Australia and New Zealand Banking Group, revealed they faced rising bad debts.

The financial crisis, the most severe since the 1930s, has hammered corporate profits, with Rupert Murdoch's News Corp. the latest firm to report a big loss as it took an €6.5 billion writedown on the value of its Dow Jones acquisition, broadcasting licences and other assets.

"It is the worst global economic crisis since News Corp was formed 50 years ago," Mr Murdoch, chairman and chief executive officer, said on a conference call with analysts after the company posted its biggest ever quarterly net loss.

Toyota said it expected an operating loss for the year to end-March of €4 billion, instead of the €117 billion it forecast in late last month, as it struggles to cut production fast enough to match sliding sales.

It would be Toyota's first consolidated operating loss in its 70-year history.

Ahead of the results, Moody's Investors cut its credit rating on Toyota for the first time in a decade by one notch, affecting €14.8 billion in long-term debt.