Toyota, which vies with GM to be the world's largest automaker, said it faced an 'unprecedented crisis' and expected a loss of 150 billion yen (1.69 billion dollars), its first since it started reporting earnings in 1941.
The Japanese government meanwhile expressed deep concern about the outlook for its economy. The Toyota announcement was matched by downbeat news from Europe, where the CAC 40 stock market index in Paris plunged 1.78 per cent, the Frankfurt DAX was down 1.61 per cent and the FTSE 100 in London slid 1.15 per cent.
Despite the lengthening shadows, Tokyo's Nikkei stock market index gained 1.57 per cent on Monday. In Hong Kong however shares dived 3.3 per cent, Shanghai lost 1.52 per cent and Sydney closed 1.6 per cent down.
Toyota's forecast also came as new data in Japan, the world's second-biggest economy after the United States, showed a record drop in exports and the government forecast that the economy was getting worse.
'If we don't do anything, Japan will absolutely get mired down,' Economy and Fiscal Policy Minister Kaoru Yosano said of the data.
Hiroshi Watanabe, an economist at the Daiwa Institute of Research, said: 'Japan has been hit by an unprecedented, sudden change in climate.' Toyota said it was cutting back on production and investment as a slump in sales and a soaring yen wreaked havoc on its balance sheet, including freezing the launch of a new factory in Mississippi and slashing production in India.