FRANKFURT, September 09 (AFP) - BMW became the latest auto giant to be hit by the financial crisis Tuesday, announcing a profits dive while a key European official admitted the continent failed to read 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 percent to 298 million euros and that it 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, particularly in Germany where figures released Tuesday showed new car sales slumped eight percent 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. There was similarly grim news from the world`s biggest temp agency Adecco, which said third-quarter net profit fell almost a quarter, with revenues in countries hard hit by the financial crisis showing the steepest declines .

Adding to the gloom, global freight prices sank more than 11-fold between May and November, showing the financial crisis has began to slow international trade, the UN Conference on Trade and Development said. 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. French Finance Minister Christine Lagarde said she and her counterparts hoped interest rates would be cut later this week in the face of lower inflation. The European Central Bank and the Bank of England are both widely expected to cut interest rates when they hold separate meetings on Thursday. "We are holding our breath," said Lagarde. 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 crisis," added Juncker, 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 said. The Brussels meeting saw EU finance ministers step up pressure for tougher regulation of the global financial system in the face of US resistance. The ministers also supported a proposal to more than double the amount of money available to the bloc`s non-euro members in case they run into economic troubles. Europe`s main markets largely shrugged off the earnings gloom, with London`s FTSE 100 index of leading shares up 2.22 percent, Paris` CAC 40 adding 2.16 percent and the Frankfurt DAX rising 2.07 percent in late afternoon trade. In Tokyo, the Nikkei index jumped by 6.27 percent, lifted by a weaker yen and reports of a possible takeover of struggling electronics maker Sanyo by its rival Panasonic .