WASHINGTON - FALLOUT from the financial crisis grew on Friday as fresh job losses were blamed on the turmoil and bank chiefs faced a backlash, while stocks closed a tumultuous week with more wild swings.

In the United States, markets were reminded of the root of the problem as data showed construction starts on new US homes slumped an additional 6.3 per cent in September to the lowest level since the recession in 1991.

Housing starts fell to an annualised rate of 817,000. That was down 31.1 per cent from a year ago in the latest evidence of the bursting of the housing bubble that has ravaged the US economy and led to the global financial crisis.

US-based General Motors on Thursday announced a cut of 1,600 jobs, while Swedish plane maker Saab said it would cut 500 positions over two years after announcing heavy losses.

Unemployment has grown across Europe and the US with key sectors such as car-makers badly hit. Analysts forecast worsening economic conditions in most advanced economies.

Chinese toy maker Smart Union, heavily reliant on the US market, announced it had gone bust due to the financial crisis, leaving up to 7,000 people jobless.

The world's largest steelmaker, ArcelorMittal, said it was cutting production and could ultimately reduce output by as much as 15 per cent because of weakening demand.

The finance industry's reputation took a new blow in France where Caisse d'Epargne bank said it lost about 600 million euros (S$1.2 billion) in a trading 'incident'.

A company official, speaking on condition of anonymity, said that a group finance director had been sacked over the loss. French President Nicolas Sarkozy said those responsible must 'bear the consequences'.

On arriving in Canada, the French leader also said that a summit of world leaders on the crisis was likely to take place before the end of the year.

Mr Sarkozy was due in the United States for talks Saturday with President George W. Bush.

Also on Friday, Swiss newspapers angrily called on former top managers of banking giant UBS to return bonuses after the bank had to be rescued by the state this week.

'Mr Ospel, pay back your bonus! Now! Immediately!' screamed the front page of tabloid Blick, referring to former UBS chairman Marcel Ospel, who was forced to resign this year over billions in losses in the US subprime mortgage crisis.

The headline reflects widespread public anger in Europe and the United States about the bailout of troubled banks, whose bosses have pocketed millions in bonuses in recent years.

In other developments on Friday:
- The Libyan state became the second biggest stakeholder in Italy's leading bank UniCredit as foreign investors showed renewed interest in troubled Western banks amid the global financial crisis.

- Ukraine said it was negotiating a 14-billion-dollar emergency loan with the International Monetary Fund and Argentina announced it had struck a deal with three foreign banks to renegotiate part of its 150-billion-dollar sovereign debt mountain.

- Both houses of the German parliament approved the government's rescue package for the financial sector. But 99 deputies voted against and Greens parliamentary chief Renate Kuenast said the proposals were a blank check for banks which could not be held accountable by taxpayers.

- Luxembourg joined the scramble to strengthen bank deposit guarantees.

The banking principality increased its guarantee from 20,000 euros to 100,000.

- British Prime Minister Gordon Brown said in a newspaper column that the financial crisis was a 'defining moment' for the world economy and renewed his call for revamped global institutions.

'The old post-war international financial institutions are out of date,' he wrote in The Washington Post.

'They have to be rebuilt for a wholly new era in which there is global, not national, competition and open, not closed, economies.'

Returning to the US economy, Mr Andres Carbacho-Burgos at Economy.com said the latest data on home construction showed the housing market is still looking for a bottom after an unprecedented meltdown.

'With the nation's financial crisis resulting in tighter credit across the board, housing construction will see at least another month of declining activity before picking up,' he said.

Global stock markets remained choppy after wild swings in the past week, but most were firm as some analysts said there was evidence of a 'bottom' from the market meltdown of the past few weeks.

The London FTSE 100 index surged 5.22 per cent, the Paris CAC 40 added 4.68 per cent and the Frankfurt Dax finished 3.43 per cent up.

On Wall Street, the Dow shed 1.41 per cent to close at 8,852.22, capping a week of ups and downs that saw the blue-chip index gain 4.7 per cent after a horrific 18 per cent meltdown the prior week.

Tokyo's Nikkei index finished a volatile week - in which it soared a record 14.15 per cent on Tuesday and fell more than 11 per cent Thursday - five per cent higher.

'We are exhausted with the recent violent swings. Honestly, I want to take a little break,' said Mr Masatoshi Sato, a broker at Mizuho Investors Securities. -- AFP