The euro zone's economy will contract for the first time in 2009, the European Commission forecast Monday. EU commissioners expect the euro-zone economy to shrink 1.9 percent this year, which would be the first contraction in the currency bloc's 10-year history. As recently as November, the commission predicted a 0.1 percent expansion. The downturn is also shredding jobs in the 16 countries now sharing the euro, with the commission expecting the euro-zone unemployment rate to climb to 9.3 percent this year from 7.5 percent last year.
Deutsche Bank warned that it expects a $6.3 billion loss after taxes in the fourth quarter. Commerzbank, its local rival, reached agreement recently with the government for more state aid.
Yahoo named Carol Bartz as chief executive. Bartz used to head Autodesk, a software company, and is on the boards of Intel and Cisco Systems. She comes to Yahoo after a turbulent year for the Internet company, during which it resisted a takeover bid from Microsoft and CEO Jerry Yang resigned. Microsoft recently said that it is still interested in Yahoo's search business.
Nortel Networks filed for bankruptcy protection. Based in Toronto, the telecom-equipment-maker has experienced a drop in demand amid the global downturn, as have other technology companies. Its share price has fallen to less than $1 on the New York Stock Exchange.
Alitalia began operating as a private company and was boosted by Air France-KLM taking a 25 percent stake in a "strategic partnership." The troubled Italian airline was saved from oblivion last year when Italian Prime Minister Silvio Berlusconi pushed for a special bankruptcy law that took on much of the national carrier's debt. Since then, Alitalia has merged with a smaller rival and attracted investors.
In one of the biggest deals since the beginning of the global financial crisis, RWE, a German utility, reached agreement to buy most of Essent, a Dutch counterpart, for $11 billion.
There was further discomfort for India's outsourcing industry when it emerged that the World Bank had banned Wipro Technologies and Megasoft Consultants from its procurement program because the firms had provided "improper benefits to bank staff." Satyam Computer Services, which was barred from doing business with the bank last year for the same reason, recently revealed a huge accounting fraud.
Abbott Laboratories, which makes medical devices, agreed to buy Advanced Medical Optics, the biggest producer of equipment used in laser-vision surgery, in a deal valued at $2.8 billion. Although the economic downturn is expected to cause the market for laser eye surgery to droop, Advanced Medical also specializes in treating cataracts, a condition that is forecast to become more widespread as populations age around the world.Political economy
Russia's gas dispute with Ukraine sputtered on. The European Union won a promise that Russian gas supplies would resume, only for them to be cut off again; the European Commission spoke of taking legal action. Southeastern Europe, in particular, continued to feel the chill.
Germany proposed a fiscal stimulus worth $67 billion over two years. There is also to be a $132 billion fund to guarantee bank loans to business. Germany had been criticized for not doing more to boost its economy; its stimulus is still only 1.3 percent of annual GDP. Elsewhere in Europe, Greece's credit rating was downgraded, and Ireland, Portugal and Spain were put on notice that theirs might be, too.
The British government gave the go-ahead for a third runway at Heathrow, to the delight of business groups and unions but causing howls of protests from greens (and London residents who live under the airport's flight path).
Mexico's President Felipe Calderon became the first foreign leader to meet Barack Obama since his election victory in November. He said Obama had not proposed renegotiating the North American Free Trade Agreement but wanted to review labor and environmental standards in the accord.