FRANKFURT, Nov 4: BMW became the latest auto giant to feel the pain of the financial crisis, announcing a massive fall in profits, as European finance ministers confessed they failed to read the recession warning signs.

As a string of leading companies revealed sinking profits, the luxury German car firm said its third-quarter net profit plunged 63 per cent to 298 million euros and would cut production by an additional 40,000 units this year.

Owing to the poor market climate and uncertainties caused by the financial crisis, the profitability targets set for 2008 are no longer achievable, it said in a statement.

The likely progress of business over the coming months cannot be forecast with any exactitude.

The auto industry has been one of the sectors worst hit by the downturn, particular in Germany where figures released on Tuesday showed new car sales slumped eight per cent in October.

Meanwhile, clothing-to-food retailer Marks and Spencer, seen as a barometer of consumer sentiment in Britain, said net profits sank by 43 percent to 223.2 million pounds (277 million euros, 350 million dollars) in the first half of the year owing to tough trading conditions.

Market conditions and consumer confidence declined through the half, leading to reduced profits year on year due to lower sales, M&S chief executive Stuart Rose said in the earnings release.

There was similarly grim news from the world’s biggest temp agency Adecco which said its third-quarter net profit fell almost a quarter, with revenues in countries hard hit by the financial crisis showing the steepest declines.

It warned it would miss its business targets in the quarters to come” due to difficult market conditions leading to even more pronounced pressure on revenues in most countries.

The results from such economic bellwethers were likely to darken the mood at a meeting of European Union finance ministers in Brussels, being held a day after an official report forecast the 27-nation bloc was headed for recession.

The chairman of the eurozone, which groups the 15 nations using the single currency euro, acknowleged the continent had been caught out.

Recession awaits us, and we didn’t think that recession lay in waiting, Jean-Claude Juncker told members of the European Parliament.

We were badly mistaken with the different sequences of this crisisadded Juncker, who is also Luxembourg’s finance minister and premier.

German Chancellor Angela Merkel, whose cabinet is to approve a crisis package on Wednesday, said the coming year would be difficult.

In 2009 we will have bad news but we are going to do something so that things can and will get better in 2010, Merkel told employers, adding the new package would serve as a “bridge” to recovery.

The Brussels meeting saw approval for plans to throw Hungary a 6.5-billion-euro lifeline as part of an international IMF-led bailout.

Europe’s main markets largely shrugged off the earnings gloom with Frankfurt jumping 1.42 per cent, London up 0.93 per cent and Paris up 1.56 per cent in morning trade.

In Tokyo, the Nikkei index jumped by 6.27 per cent, lifted by a weaker yen and reports of a possible takeover of struggling electronics maker Sanyo by its rival Panasonic.

Analysts said traders were betting that Barack Obama, favourite to win Tuesday’s US election, would take extra steps to tackle a looming recession in the world’s largest economy.

We think an Obama victory... is likely to lead to more expansive fiscal policy and a more protectionist-minded White House, said Barclays Capital analyst Rodrigo Guimaraes.

But in the short-term, an Obama victory, combined with a strong majority in the Senate... will enable Washington to respond more proactively on the management of the financial crisis.

Central bankers meanwhile continued their efforts to restore stability to world markets, with Australia slashing its key lending rate by a bigger-than-expected 75 basis points.

French Finance Minister Christine Lagarde also further raised expectations of a rate cut by the European Central Bank this week when she told reporters her EU colleagues were hoping for a reduction.—AFP