Jan. 28 (Bloomberg) -- Bankers meeting at the Swiss ski resort of Davos said there are increasing risks of a global recession, while manufacturers countered that they have yet to feel the effect of it in their businesses.

Financiers tramped through the snow, glued to their Blackberries, as news broke of an emergency interest-rate cut by the Federal Reserve and Societe Generale SA's record loss at the hands of a rogue trader. Industrialists took comfort from the prospect of further rate cuts, demand from oil producers and the likelihood of continued -- albeit slower -- growth in China.

``There's a split between those who are in finance and those who are in more general industries,'' Daniel Yergin, chairman of Massachusetts-based Cambridge Energy Research Associates Inc., said in an interview. ``The buildup of these very large financial surpluses in the energy exporters and the Asian manufacturing exporters has coincided with this crisis.''

Predictions of a U.S. recession, and whether the rest of the world will follow, was the main debate as 2,500 executives, officials and investors gathered 1,560 meters above sea level for the World Economic Forum's annual meeting.

Stocks today retreated in Europe and Asia, led by commodity producers and industrial companies, on concern the global economy is slowing and companies may report more losses linked to subprime mortgages. U.S. index futures dropped.

Don't Panic

Economists at Goldman Sachs Group Inc., Morgan Stanley and Merrill Lynch & Co. project the U.S. will this year suffer its first recession since 2001. Michael Dell, chief executive officer of Dell Inc., the world's second-largest maker of personal computers, said there's no reason ``to get in a panic.''

``There is some economic downturn, but I would not move to put it in the recession category,'' Alan Boeckmann, CEO of Irving, Texas-based Fluor Corp., said in a Bloomberg Television interview. The Middle East is providing more oil and gas contracts, and mining projects are strong in Asia and South America, he said.

Even if the U.S. does sneeze, ``that doesn't mean the whole world will catch a cold,'' Juergen Hambrecht, CEO of BASF AG, the world's largest chemical maker, said in an interview.

While the global economy will certainly slow, a world recession isn't inevitable, says Allen Sinai, chief economist at Decision Economics in New York. Sinai puts the odds at 20 percent. Nariman Behravesh, chief economist at Global Insight in Lexington, Massachusetts, estimates a 30 percent chance.

China's Expansion

China, which accounted for 17 percent of global growth last year, will probably be hurt by waning demand from the U.S. for the country's exports. The nation's economy grew 11.2 percent in the fourth quarter from a year earlier, down from 11.5 percent and 11.9 percent in the third and second quarters respectively.

Caterpillar Inc. reported last week that fourth-quarter earnings rose 11 percent as demand in emerging markets offset slower U.S. sales. ``Compared to the audience here I'm on the optimistic side,'' James Owens, CEO of the world's largest maker of earth-moving equipment, said in Davos. The likelihood the U.S. dollar, interest rates and taxes will fall further should provide more relief, he said.

The worst U.S. housing market in 26 years has eroded growth in the world's largest economy, pushed up global borrowing costs and triggered historic losses and executive ousters at banks and brokers including New York-based Merrill and Citigroup Inc. Financial companies eliminated more than 25,000 jobs in the past six months as they racked up $136 billion of writedowns and credit losses tied to mortgage securities.

Wall Street Carnage

Such carnage explains why Wall Street executives spent their time on the mountainside predicting a greater U.S. slowdown and warning that economies elsewhere won't be immune.

``The problems in the credit market are spreading, they are spreading to the consumer sector,'' John Thain, Merrill's CEO, told a panel. ``We are likely to see another wave of problems on the consumer-credit side.''

If the U.S. consumer retrenches, it will hurt even the strongest foreign economies, said Goldman CEO Lloyd Blankfein. ``It's impossible for it to be a complete decoupling,'' he said. ``How can that growth be maintained if the ultimate source of demand is receding?''

Morgan Stanley's Asia Chairman Stephen Roach called a global recession a ``close call.'' He said there's no substitute for the $9.5 trillion spent last year by American consumers. Households in China spent $1 trillion and those in India $650 billion, he calculates.

Fed Cut, Bush Deal

Policy makers split the difference between the chief executives by hoping for the best and planning for the worst. The meeting began a day after the Fed cut its benchmark rate by 75 basis points and a day before President George W. Bush struck a deal with the House of Representatives for a package of tax cuts and new spending worth at least $150 billion.

International Monetary Fund Managing Director Dominique Strauss-Kahn urged governments to ease fiscal policies, reversing the lender's long-standing call to narrow budget deficits.

``While we continue to believe the U.S. economy will grow, there's no doubt it will grow at a slow pace and the downside risks have grown,'' said U.S. Treasury Undersecretary David McCormick. European Central Bank President Jean-Claude Trichet said while his economy remained solid, it was subject to greater threats and he sought stricter banking regulation.

To contact the reporters on this story: Adrian Cox in London at acox2@bloomberg.net; Simon Kennedy in Paris at skennedy4@bloomberg.net.

Last Updated: January 28, 2008 07:44 EST