Obama seeks bailout funds amid corporate gloom

Latest News of USA: Obama seeks bailout funds amid corporate gloom

WASHINGTON/TOKYO (Reuters) - U.S. President-elect Barack Obama sought the remaining half of $700 billion in financial bailout funds from Congress, as sinking corporate earnings underlined the depth of the gathering recession.

Aluminum producer Alcoa Inc. kicked off the Wall Street earnings season with a wider-than-expected quarterly loss and a source said Sony Corp was expected to post its first operating loss in 14 years this business year.

As politicians worldwide try to alleviate sharply slowing growth and mounting job losses, Obama said he had asked President George W. Bush to formally request the remaining bailout funds so they could be ready when he takes office on January 20.

"I felt that it would be irresponsible for me, with the first $350 billion already spent, to enter into the administration without any potential ammunition should there be some sort of emergency or a weakening of the financial system," Obama said.

The $700 billion rescue program was approved last October to bolster the financial industry plagued by bad mortgage debts that pushed several major institutions to the brink of collapse.

CORPORATE LOSSES

Sony shares fell 8 percent on media reports of its likely loss. A source close to the matter told Reuters the maker of Bravia flat TVs and Playstation 3 video game consoles may post an operating loss of about $1.1 billion for the year to end-March.

The news came as Alcoa, which is slashing 15,000 jobs, posted a net loss of $1.19 billion for the fourth quarter on lower demand and declining metal prices.

"The aluminum industry was caught up in a perfect storm ... prices have never fallen so fast," President and Chief Executive Officer Klaus Kleinfeld told analysts.

In South Korea, the country's No. 5 automaker Ssangyong Motor Co said it had suspended production at all of its factories as some suppliers stopped delivering parts worried whether they will get paid by the company, which fights to avoid bankruptcy.

Earlier Citigroup shares had fallen 17 percent after a Wall Street Journal report the bank might post a quarterly operating loss of at least $10 billion.

The corporate gloom took its toll on equity markets, with Asian indexes following U.S. stocks lower. Tokyo's Nikkei, which had been closed for a holiday on Monday, fell more than 4 percent.

A record rise in Japanese bank lending in December only added to the gloom. Hardly a sign of any business upturn, the data was a sign that companies struggled to raise cash in the commercial paper and bond markets as they used to and were forced to borrow directly from banks.

BLEAK OUTLOOK

Most of the world's developed economies are already officially in recession and the outlook for 2009 is bleak.