Credit Worries Continue to Ripple Across Globe

Shockwaves from the global credit crisis spread Thursday, rattling industries around the world and raising the stakes for Congress to finish up a $700 billion bank bailout.

U.S. economic data amplified warnings that a recession is near, and European Central Bank President Jean-Claude Trichet said Europe's economy was weakening, opening the door for the first interest rate cut there in five years.

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Business leaders from hoteliers to automakers warned that a crisis that began with risky lending to the overheated U.S. housing market was on the cusp of a dangerous new phase.

"There are thousands, maybe tens of thousands of jobs at stake in our company alone, and we are typical," Marriott International Inc Chief Financial Officer Arne Sorenson said in urging Congress to pass the bailout.

Backers of the rescue plan, including U.S. Treasury Secretary Henry Paulson, called on members of the House who opposed a similar measure on Monday to change their vote.

The Senate passed the bill Wednesday night and the House is expected to vote again on Friday.

• What's in the Senate Bailout Plan
• Is a Bailout Really Needed?

Investors around the globe scurried for safety, betting that frozen credit markets would slam the brakes on global economic growth.

Latin American currencies tumbled and stocks sank, led by a nearly 8 percent drop in Brazil's benchmark stock index, as concern grew that the U.S rescue package would be too little and too late to head off a deeper downturn.

U.S. stocks dropped more than 3 percent, while U.S. and euro-zone government bonds drove higher in a renewed safe-haven rally.

An economist says bailout will help restore confidence. Watch video at left.

Oil prices fell more than $4 a barrel on the expected slowdown, and the dollar rose to a year high against the euro on the speculation of a rate cut by the ECB.

Aims to Put House in Order

House Speaker Nancy Pelosi said congressional leaders were working hard to secure votes for the bailout bill and would not risk bringing the measure to the floor without being confident it would pass, avoiding a repeat of the defeat Monday that stunned investors around the world.

U.S. data underscored the growing threat to the world's largest economy.

U.S. factory orders fell 4 percent in August, the sharpest contraction in two years, which came on top of data on Wednesday that showed manufacturing activity in September at its weakest since the 2001 recession.

U.S. jobless claims rose last week to their highest level in seven years, ahead of September payrolls data due out on Friday.

In a sign of how the credit crisis has hit even the bluest of the blue chips, shares of General Electric tumbled to a five-and-a-half-year low.

The bellwether involved in businesses from turbines to television failed to soothe market concerns with sale of $15 billion in new stock to investors including Warren Buffett.

Automakers including General Motors and Ford Motor warned of tougher times, as evaporating credit raises the risk of deeper production cuts and job losses for a struggling industry.

"The problems of subprime and credit crunch are now all over the world," Ford Chief Executive Alan Mulally said.

"The downturn is longer and deeper than we foresaw a year ago." In a week marred by bank rescues across Europe, French President Nicolas Sarkozy's office said he would host the leaders of Britain, Italy, Germany and the ECB on Saturday to discuss a response to the credit crisis.

CONTINUED : 'Game Over' If Bill Doesn't Pass?

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