U.S. Reports Grim Data, EU Vows to Shield Economy

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U.S. banks reported losses and other companies painted a negative outlook for the U.S. economy as EU government leaders led by French President Nicolas Sarkozy vowed to shield EU industries from the global crisis. Sarkozy intends to meet with President George Bush this weekend to push for an international overhaul solution.

NEW YORK (Reuters) - Major U.S. banks reported huge losses and other companies painted a grim outlook for the battered U.S. economy on Thursday as European leaders vowed to shield their industries from the global crisis.

French President Nicolas Sarkozy, representing the EU on the world stage, said he would meet U.S. President George W. Bush on Saturday to push for an overhaul of the international financial system.

U.S. investment bank Merrill Lynch reported net write-downs of $5.7 billion from toxic assets and Citigroup reported a quarterly net loss of $2.8 billion.

Famous motorcycle maker Harley-Davidson Inc said a slowdown in sales had spread from the United States to Europe and cut its earnings forecast for the year.

U.S. industrial production posted its biggest drop in 34 years in September, and a volatile Wall Street fell nearly 4 percent.

European stocks were down 4 percent.

A Reuters poll of economists said the world's richest nations are in or close to recession, with a sharp deterioration in the outlook for the United States.

In Brussels, EU leaders said they were determined to take whatever steps necessary to support jobs and the economy, and Sarkozy said the auto sector may need help given that the United States was making cheap loans to its carmakers.

"If we can bring coordinated answers to the financial crisis, can we not bring coordinated answers to the economic crisis?" Sarkozy asked.

Central banks in Europe renewed efforts to free up liquidity and unblock frozen lending, with further action from Switzerland, Britain and the European Central Bank.

Switzerland's two largest banks -- UBS and Credit Suisse -- became the latest to say they were receiving emergency funding as the country's government and other investors moved to shore them up.

Japan's prime minister, Taro Aso, said Washington may need to push yet more cash into its banks to restore investor confidence, shattered by a crisis that began with a U.S. housing market collapse and now threatens economies worldwide.

"The markets are selling off stocks because investors still think the steps by U.S. authorities are not sufficient," Japan's Aso said.

This article was originally published on 2008-10-16
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