A passer-by walks past an electronic stock board in downtown Tokyo Friday, Oct. 10, 2008. Japanese shares nose-dived more than 10 percent in morning trade Friday as panicked investors dumped stocks following massive overnight losses on Wall Street and on growing fears over a global recession. The benchmark Nikkei 225 index lost 974.12 points, or 10.64 percent, to close the morning session at 8,183.37. (AP Photo/Itsuo Inouye)
In Europe, banking and mining stocks were stronger, but trading was subdued by news euro-zone unemployment edged up to 8 percent in December and by expectations U.S. GDP figures for the fourth quarter due later in the day will show the biggest drop in more than 25 years.
"The banks for the time being are continuing to be supported by further banking initiatives by western governments and the U.S. bailout package which is slowly working its way through the legal system," said Keith Bowman, an analyst at Hargreaves Lansdown Stockbrokers in London. The U.S. plan involves "buying some of the toxic assets and ringfencing them in bad banks," he added.
Later Friday, the U.S. Commerce Department is set to release a report which analysts expect will show the economy shrank at an annualized pace of 5.4 percent in the October-December period, a much faster descent than the 0.5 percent decline logged in the prior quarter. If economists' forecasts are correct, it would mark the weakest quarterly showing since an annualized drop of 6.4 percent in the first quarter of 1982, when the country was suffering through a severe recession.
Investors also digested news from the European Union that an additional 230,000 people in the euro zone lost their jobs in December, reflecting a worsening economic situation across the 16-nation single currency area.
In Asia, Japan's Nikkei 225 stock average fell 257.19, or 3.1 percent, to 7,994.05 as investors reeled from a mounting pile of bad earnings reports and the latest economic data.
Industrial output at Japan's manufacturers plunged 9.6 percent from the previous month in December, the largest drop since Tokyo began measuring such data in 1953. The unemployment rate in the world's second-biggest economy jumped to 4.4 percent in December from 3.9 percent in November.
Honda Motor Corp. dived 9.2 percent ahead of quarterly results. The automaker's October-December profit, released after the market closed, tumbled 90 percent, hit by rising costs, a stronger yen and falling sales in key markets.
Megabank Mizuho Financial Group Inc., which had a quarterly loss of 50.55 billion yen ($559 million), slid 7.4 percent. Electronics giant Sony Corp., which Thursday reported a 95 plunge in October-December profit, sank 6.8 percent.
Toshiba Corp. tumbled 17.4 percent after forecasting a full year loss due to plummeting demand for its flash memory chips, used to store data in consumer gadgets like music players and digital cameras.
"Investors are looking for a magic bullet but there isn't one. There isn't one solution that by itself can solve all the complex problems that the world economy faces," said Arjuna Mahendran, head of Asian investment strategy at HSBC Private Bank in Singapore.
"In typical myopic fashion, markets are alternating between despair and hope," he said. "The problem is that there is no real visibility about earnings and the economic situation and there may not be until the second half of this year or very late in the year."
"There are hopes for more stimulus measures because the authorities in China have said they are determined to stabilize the economy," said Castor Pang, an analyst at Sun Hung Kai Financial in Hong Kong.
India's Sensex rose 2 percent, South Korea's Kospi retreated 0.4 percent while markets in Singapore and the Philippines also lost ground. Australia's main index gained 0.4 percent. Markets in mainland China are closed all week for the Lunar New Year.
Oil languished below $42 a barrel in Asia as more dismal U.S. economic numbers offset news that OPEC may further cut production. Light, sweet crude for March delivery rose 28 cents to $41.72 a barrel by noon in Europe in electronic trading on the New York Mercantile Exchange.