Russia, China warn of dire economic straits in 2009

Russia and China issued stark warnings on Wednesday about the impact of the crisis on their recently booming economies in 2009, as stocks and oil prices took a hit from economic gloom over Christmas.

A top official in Moscow warned that the crisis could spark popular unrest after a Kremlin economic aide said Russia next year would have its first budget deficit since the 1998 financial crisis, which brought the country to its knees.

Japan also approved a record-high budget, aimed at avoiding the worst effects of the crisis, and there were reports that Germany was preparing to pump up to 40 billion euros ($56 billion) into the economy in a new rescue plan.

"We need to take unprecedented measures when in an extraordinary economic situation," Japanese Prime Minister Taro Aso said at a news conference after his cabinet backed the new $980 billion budget.

"Japan cannot evade this tsunami of world recession. But by taking bold measures, we aim to be the world's first to come out of recession," he said.

In Asian stock markets, Tokyo tumbled 2.37 percent and Chinese shares closed down 1.76 percent. European stocks also slipped, with the FTSE 100 in London closing down 0.93 percent and the CAC 40 in Paris down 0.39 percent.

There was more bad news coming from the United States, the world's biggest economy, where US government figures showed jobless claims rising by 30,000 over the past week to 586,000 and incomes and spending contracting in November.

With oil prices at their lowest level for four years because of weak global demand, the price of light sweet crude for delivery in February shed $1.56 to $37.42 a barrel on the New York Mercantile Exchange (NYMEX).