Economic woes increase as crisis deals in trouble

By Jeremy Gaunt

LONDON (Reuters) - A number of deals designed to cure the global financial crisis were in danger of unravelling on Wednesday, with losses mounting at banks and economies showing further signs of serious deterioration.

The euro zone, Britain, China and South Africa reported data supporting the arrival of a global recession and prompting expectations of further interest rate cuts.

"We are certainly prepared to cut ... again, if that proves to be necessary," Bank of England Governor Mervyn King told a news conference after UK inflation was forecast to be minimal.

The International Monetary Fund withheld official backing for a $6 billion (3 billion pound) bailout plan for Iceland, the Financial Times reported, putting loans to the North Atlantic island nation under threat.

Some of banking giant Barclays' biggest shareholders have threatened to vote against a planned 7 billion pound capital raising unless it improves the terms of the deal, newspapers said.

The latter follows a row over the crisis-driven planned purchase of lender HBOS by Lloyds with leading banking figures arguing a more competitive deal should be sought.

Aides to U.S. President-elect Barack Obama, meanwhile, were playing down reports of tension with the Bush administration over help for the stricken car industry.

A feud within Japan's cabinet over whether rich people should get payouts as part of a stimulus package looked set to be put aside after delaying the plan for weeks.