A tidal wave of layoffs washed across the world on Monday, sending tens of thousands of workers into joblessness as the pain of the global recession worsened.
Amid reports of tumbling corporate profits, dire outlooks and a lowered global growth forecast from the International Monetary Fund, companies in Europe and the United States announced they would cut vast numbers of employees in a dramatic effort to reduce costs and keep their businesses afloat.
Despite the corporate gloom, markets rallied on some of Monday's other news: No. 1 drugmaker Pfizer said it would buy rival Wyeth for $68 billion, Barclays said it had no need to raise capital, and sales of existing U.S. homes unexpectedly rose 6.5 percent.
"In the midst of a global recession, here is Pfizer, hopefully spending their dollars wisely," said Andre Bakhos, president of Princeton Financial Group in New Brunswick, New Jersey. "It adds a little confidence that all is not lost."
Monday's layoff announcements, affecting more than 70,000 workers, started in Europe, with electronics maker Philips announcing 6,000 job cuts as it posted a bigger-than-expected 1.5 billion euro ($1.9 billion) loss, its first quarterly loss since 2003.
ING cut 7,000 of its 130,000 jobs, replaced its CEO and got guarantees from the Dutch government as other European banks sought to reassure investors they are coming to grips with the turmoil in financial markets.
Corus, Europe's second-largest steelmaker, said 3,500 jobs would go worldwide, including 2,500 in Britain, as the company, owned by India's Tata Steel, sought to boost operating profit.
CATERPILLAR, SPRINT, HOME DEPOT
In the United States, Caterpillar, the world's largest maker of heavy equipment, said it would eliminate nearly 20,000 jobs, reported a 32 percent drop in profit and forecast the weakest year for business since the end of World War Two.
Sprint Nextel Corp the No. 3 U.S. mobile service provider, said it will cut up to 8,000 jobs, or about 14 percent of its workforce. Retailer Home Depot Inc said it will cut 7,000 jobs, or about 2 percent of its workforce.
The International Monetary Fund slashed its forecast for 2009 global growth to 0.5 percent from 2.2 percent in last economic outlook in November, a source told Reuters.
Stock markets rose, with Europe's FTSE 300 index up 3 percent and major U.S. indexes up more than 1 percent. The Dow Jones Industrial Average was up 1.1 percent. Bond prices fell as the rise in existing-home sales raised questions whether the housing market was as weak as thought.
Gold climbed above $900 an ounce, the highest in more than three months.
Although it did not announce job cuts, Dubai-based DP World, which operates 48 marine terminals and 13 new port developments in 31 countries worldwide, said it was putting all expansion projects under review and would cut costs and freeze recruitment as growth slows in 2009.
"The economic environment remains extremely fragile," said Commerzbank equity strategist Hans-Juergen Delp.
Meanwhile, the credit crunch claimed the government of Iceland, which Prime Minister Geir Haarde said had fallen apart under the pressures of the financial crisis.
The Norwegian government was forced to dip deeper into its reserves and presented a $2.87 billion fiscal stimulus package to prevent unemployment surging.
"This is the most ambitious fiscal stimulus proposed in more than 30 years to boost growth and employment," Finance Minister Kristin Halvorsen told parliament.
Banks have borne the brunt of the credit crisis, which was sparked by mass defaults on U.S. home loans. The sector has seen a wave of consolidation as leading banks around the world have collapsed or been taken over.
But shares in Britain's Barclays leaped by 73 percent after it said its projected 2008 pretax profit of more than 5.3 billion pounds ($7.3 billion) would include significant writedowns of 8 billion pounds and that the bank had made a good start to 2009.
British shoe retailers Barratt and Priceless, with 400 stores and 5,450 workers across the country, went into administration in the latest sign of the consumer slowdown.
Japanese stocks closed at their lowest in almost three months.
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