Crisis deals under severe pressure

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IMF unsure if worst financial crisis is over

London, Singapore, Nov 12: A number of deals designed to cure the global financial crisis were in danger of unravelling on Wednesday, with losses mounting at banks and economies deteriorating. The International Monetary Fund withheld official backing for a $6 billion bailout plan for Iceland, the Financial Times reported, putting loans to the North Atlantic island nation at threat.

Some of British banking giant Barclays' biggest shareholders have threatened to vote against a planned 7 billion pound ($10.83 billion) capital raising unless it improves the terms of the deal, British newspapers said.

The latter follows a row over the crisis-driven planned purchase of British lender HBOS by Lloyds TSB with leading banking figures arguing a more competitive deal should be sought. Aides to US President-elect Barack Obama, meanwhile, were playing down reports of tension with the Bush administration over help for the stricken car industry. A feud within Japan's cabinet over whether rich people should get payouts as part of a stimulus package looked set to be put aside after delaying the plan for weeks.

Questions are also beginning to be asked about just how much help governments can give. "The US' financial resources are already stretched and a flood of news demands may overwhelm a government already staring down at a record budget deficit next year," UBS economists said in a note.

Financial markets were rocked again under the combined pressure of a global economic downturn and the worst financial crisis in 80 years.

European shares rose 1.6 %, after losing more than 4 % on Tuesday, reflecting the sharp volatility currently infecting investors.

There were more corporate profit warnings with General Motors shares falling on Tuesday to levels not seen since World War Two. "Whether it's economic indicators or company news, it's just too awful," said Takashi Ushio, head of the investment strategy division at Marusan Securities in Tokyo. The financial industry showed more pain with Dutch group ING posting its first-ever quarterly loss as impairments on stocks and bonds, counterparty losses and property writedowns ate into its income.