The US government threw Bank of America a new 20-billion-dollar lifeline on Friday as once-rock steady firms such as Japan's Honda cut thousands of jobs piling on a new round of gloomy news for governments battling recession.
But Asian and European stock markets rallied after a series of sharp new shocks to share prices.
Bank of America, the largest US bank by assets, will get another 20 billion dollars in fresh capital and a 118-billion-dollar asset guarantee to help it absorb broker Merrill Lynch, the US Treasury Department announced.
The bank has already received 25 billion dollars (19 billion euros) in capital injections from the 700 billion dollar US financial bailout fund set up to rescue banks reeling from financial turmoil triggered by a home mortgage meltdown.
That included 10 billion dollars for the investment brokerage firm Merrill Lynch, which Bank of America bought in a deal that closed January 1.
Bank of America will have to meet strict restrictions on executive pay, one of the conditions set by Democrat lawmakers mocrats in Congress have called for as a condition to release new bailout funds.
The Treasury said in a joint statement with the Federal Deposit Insurance Corporation that it "will invest 20 billion dollars" in BofA from the Troubled Assets Relief Program (TARP) "in exchange for preferred stock with an eight percent dividend to the Treasury."
The government will also protect "an asset pool of approximately 118 billion dollars of loans, securities backed by residential and commercial real estate loans, and other such assets."
The financial crisis has toughened one of the worst recessions of recent decades.
Russia allowed a fifth consecutive daily devaluation of its currency, pushing the ruble to another record low against the dollar, there was no let-up in the seemingly relentless torrent of gloomy economic and corporate news.
In Japan, Honda Motor Co. said it will not renew contracts for 3,100 temporary workers and Fuji Heavy, the maker of Subaru cars, warned of its first annual loss in 15 years.
Mobile phone maker Sony Ericsson said it had plunged deep into the red in the third quarter with a net loss of 25 million euros (33.7 million dollars), although its sales volumes beat analysts' expectations.
Bank of Japan governor Masaaki Shirakawa underscored the bleak picture of the world economy.
"The global financial markets remain, on the whole, under heavy strain," Shirakawa said. The global economy was "slowing down rapidly," he added.
The Bank of Japan is reportedly considering spending two trillion yen (22 billion dollars) to buy corporate debt, as it seeks new ways to ease a credit crunch.
The International Energy Agency cut its oil demand forecasts due to a much sharper-than-expected economic slowdown, with the oil market facing its first two-year contraction since 1982-1983.
Europe's leading stock markets opened firmer on Friday, snapping a series of heavy losses in a strong technical rebound sparked by a recovery overnight on Wall Street and gains in Asia.
At the open, London's FTSE 100 index of leading shares rose 0.97 percent to 4,160.88 points. In Paris, the CAC index jumped 2.11 percent to 3,059.21 points and in Frankfurt, the DAX was up 1.36 percent to 4,395.79 points.
Asian stock markets mostly rose as investors welcomed the Bank of America capital boost and hunted for bargains after the previous day's plunge.
Tokyo ended 2.58 percent higher, rebounding from a six-week low, while Seoul gained 2.15 percent and Sydney firmed 0.6 percent.
But dealers said gains were capped by nervousness ahead of corporate earnings results in the United States and Japan that are expected to reflect the rapidly worsening business conditions in recession-hit major economies.