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TOPWRAP 4-Barclays lands big profit; US rescue plans drag on

Published 02/09/2009, 06:50 AM
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* Barclays makes 6.1 billion pounds annual profit

* U.S. politicians wrangle over stimulus bill

* Nissan forecasts annual loss, to cut 20,000 jobs

* France to announce car aid

(For more on the financial crisis, click on)

By Steve Slater and Yumiko Nishitani

LONDON/TOKYO, Feb 9 (Reuters) - British bank Barclays booked a 6.1 billion pounds ($9 billion) profit on Monday while carmakers floundered, but investors focused squarely on the fate of a U.S. stimulus bill worth more than $800 billion.

Most companies around the world are under the cosh from the worst economic crisis in decades and auto makers in particular have been hammered by collapsing demand.

Japan's No. 3 carmaker Nissan Motor Co. posted a big quarterly loss and said it would lay off 20,000 workers.

For the full year, Nissan now expects an operating loss -- its first in 14 years -- of 180 billion yen ($2 billion). Last week, its larger peer Toyota forecast an operating loss for the year would be about $5 billion.

France will unveil details of a plan to support its ailing auto sector later on Monday, an official at the presidential office said. Both Renault and PSA Peugeot Citroen are set to announce poor 2008 results this week.

French newspapers said President Nicolas Sarkozy would announce a government loan of around 6 billion euros ($7.7 billion) to the pair. Their shares rose in response.

In the United States, General Motors Corp and Chrysler LLC are racing to prove to the government they can be commercially viable after receiving a $17.4 billion bailout.

Barclays said it expected 2009 to be "another challenging year" with credit market losses shrinking but bad debt charges set to rise as recession takes a toll.

Its 2008 pretax profit was down from 7.1 billion pounds in 2007 but ahead of most forecasts and included 8 billion pounds in gross writedowns and bad debts.

"In 2008 we've had a crisis in the banking system; the principal issue for 2009 is going to be rapid economic slowdown, in a sense more a familiar but nonetheless pretty brutal slowdown in economic growth all around the world," said Barclays Chief Executive John Varley.

The UK economy was likely to contract by at least 2 percent this year, he said. Britain, the United States, Japan and the euro zone are already in recession.

The damage from the financial crisis in Europe was highlighted by a 3.7 percent fall in German exports in December and a Bank of France survey showing the French economy is expected to shrink by 0.6 percent in the first quarter of 2009.

JAPAN LANGUISHING

In Japan, data showed core machinery orders, a leading indicator of the manufacturing-oriented economy, fell 1.7 percent to a two-decade low, and Japan's current account surplus slid 92 percent in December from a year earlier.

Corporate bankruptcies rose 16 percent to a six-year high in January, with the number of bankruptcies among listed companies at a record high for any financial year since World War Two, research firm Tokyo Shoko Research said.

The Bank of Japan's top economist, Kazuo Monma, said prices may stay in a downtrend for some time and that the central bank needed to monitor whether price falls and increasing slack in the economy may create a self-perpetuating spiral of price drops and further slowing in economic activity.

Emerging economies are also suffering, with India on Monday forecasting 7.1 growth in its fiscal year 2008/09, the slowest pace in six years.

South Korea's LG Electronics said it aimed to cut $2.2 billion in costs and may shed jobs as it expects about a 20 percent sales fall in dollar terms this year.

U.S. DEBATE RUMBLES ON

For all that, financial market focus stayed firmly on the U.S. Congress, which remains sharply divided along party lines on an $800 billion-plus economic plan.

European stocks . fell as investors anxiously awaited the approval of Washington's stimulus plan and bank rescue package. Japan's Nikkei average closed 1.3 percent lower and U.S. stock futures pointed to a lower start on Wall Street.

Squabbling will resume over the plan on Monday when the Democratic-led Senate, with the help of just a few Republicans, votes to end debate on an $827 billion rescue package and clear the way for passage of the measure on Tuesday.

Negotiators will then seek to resolve differences between the Senate bill and an $819 billion version passed earlier by the House of Representatives without any Republican support.

"Negotiations will be difficult, but fun to watch," a Republican aide said.

U.S. Treasury Secretary Timothy Geithner is also preparing to unveil a bank rescue plan detailing how the administration will use the remaining $350 billion of a $700 billion bailout programme set up late last year.

His announcement was pushed back to Tuesday, from Monday, to keep the focus on the stimulus bill. (Writing by Mike Peacock, editing by Peter Millership) ($1=.6774 Pound)

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