The Co-Operative Group Ltd has agreed to cede control of its banking unit to creditors after 141 years, part of a deal to allow the lender to plug a £1.5bn (€1.77) capital shortfall.

The Japanese economy will shrink this fiscal year and will manage only flat growth the following year, the government warned today.

Most Asian markets bounced back today, hoping that a $700bn bail-out for the US financial system will soon win approval in Washington.