BRUSSELS: Higher prices for transportation fuel, heating oil and dairy products pushed yearly inflation in the euro currency area to record levels in January, while the unemployment rate held at 7.1 percent, the European Unions statistical agency said Friday.

Businesses are so far not cutting jobs but companies have mixed views about rocky times ahead, with an EU confidence survey slipping again in February as industry and the services sector were more downbeat while retailers saw sales picking up.

The European Commission last week cut its growth forecast to 1.8 percent for the euro zone this year, saying the global economy looked “unusually uncertain” but the slowdown could be short-lived if the U.S. recovers later this year.

The EU statistics agency Eurostat confirmed an earlier estimate of 3.2 percent inflation last month in the 15 nations that share the euro, the fastest price increase in 15 years and well above the European Central Banks guideline of just under 2 percent.

The ECB has held back from damping inflation by raising borrowing costs over concerns that the euro economy is slowing and banks are still reluctant to lend money in the wake of last summers credit crisis.

Unlike the U.S. Federal Reserve or the Bank of England, the ECB has not cut rates, leaving its key interest rate unchanged at 4 percent since last summer.

EU economic weather vanes painted a mixed picture for the economy on Friday with Eurostat figures showing that worries about a slowing global economy are not so far forcing job losses.

Unemployment in the euro zone was 7.1 percent in January, matching a revised estimate for December. The 7.1 percent rate is the lowest since the currency was launched nine years ago. The previous estimate for December was 7.2 percent.

A European Commission survey of business and consumer confidence fell to 100.1 in February in the euro area, falling to levels not seen since the start of 2006, before a recent growth spurt saw businesses expand on strong exports abroad and more spending at home.

The services sector slipped markedly in February as managers saw demand drop in the months ahead. Industry and construction were also downbeat but confidence levels are still above a long-term average.

Retailers, however, were more positive about current and expected sales - with German, Italian and British confidence surging while Spanish shops far more pessimistic.

Consumer confidence in the euro area was unchanged at a three-year low.

Another survey, the EUs business climate indicator, also continued to decline in February to 0.72 as industry managers cut their own forecast for output in the months ahead and flattened expectations for future orders.

Stock markets opened sharply lower on Friday after a painful dose of weak economic data reignited fears that a recession may be imminent. A new round of woes in the financial industry also contributed to the sell-off.

The Dow Jones industrials were down more than 200 points in early trading, a 1.7 percent decline, and the Standard Poors 500-stock index fell by a similar amount.

The market was poised for a poor opening after American International Group, the worlds largest insurer, posted the worst quarterly loss in company history Thursday night. Shares of financial services firms, an albatross on the market for months, fell again on Friday after AIG stock tumbled more than 6 percent in early trading.

The sell-off accelerated after a bellwether report on Chicago-area business activity unexpectedly plunged to its lowest level in more than six years. Business contracted in February, capping the worst two-month decline since 1980. The report, from the National Association of Purchasing Management, is considered a good predictor for manufacturing activity across the country.

By 11:25 a.m., the Dow was off 214.51 points, or 1.7 percent, at 12,367.67. The S.P. fell 1.8 percent to 1,343.22, and the technology-heavy Nasdaq composite index dropped 1.8 percent to 2,289.06.

The Chicago report was only one piece of a host of poor economic news that rattled investors Friday morning, underscoring anxieties that the nation is facing one of the worst economic landscapes in decades.

Consumer confidence plunged in February to a 16-year low, as rising inflation forced Americans to spend more and save less. Income growth slowed in January and consumer spending was flat when adjusted for inflation, the Commerce Department said. For the first time in at least 50 years, Americans spent more than they earned for the third consecutive month.

“All-out recession fears is what it is,” said James Paulsen, a strategist at Wells Capital Management, about Fridays market woes.

Treasury yields plummeted as investors flocked to the relative safety of government bonds. The dollar, already at a record low, continued to fall against the euro, and crude oil futures ticked up.

Investors were also spooked by a report from UBS AG that predicted financial companies will face an additional $350 billion in losses tied to the subprime mortgage collapse. That figure would be on top of the approximately $160 billion in losses that have already been disclosed by financial firms worldwide.

Javier Mascherano has finally committed his future to Liverpool by signing a four-year deal at the club.

The Argentina midfielder has been at Anfield since ending a brief stint at West Ham and until today was on a long-term loan from his owners MSI. Liverpool have paid 18.6m for the player’s services.

“I am very, very happy and now I can concentrate just on playing football,” Mascherano told Liverpoolfc.tv. “I said all along that I wanted to stay at Liverpool and now that I have signed I can say this is the best and the biggest moment in my career so far.

“From the first day I arrived at Liverpool the feeling was good and I knew this was where I wanted to play my football. It’s good news for me and my family that everything is sorted and I know where my future is going to be. I just want to do my best for the fans and the people of the club.

“I am at a top side and I know I can win titles here. That’s the big thing for me. I want to be at a club where we can win trophies and have success.”

The Liverpool manager Rafael Benнtez was just as delighted to secure the services of the 23-year-old midfielder. “We must be really pleased with the situation now,” he said.

“He has been a key player for us since he has been here and now we know he can be a key player in our future.

“From the start we knew Javier was a player with quality and a fantastic mentality. We knew the player when he was in the reserves at River Plate but was playing for the senior national team and we had been monitoring his career since then.

“He is young but he has great experience having played for his country. We knew he would be a good signing for us.

“It’s clear that he is one of the best midfielders in the world but he can get better with us. We now have a lot of good options in the centre of midfield and that’s good news for the club.”

The Liverpool chief executive Rick Parry, who worked painstakingly to finalise the deal, added: “Our overriding thought is that we are delighted to have signed a world-class player on a long contract and I know Javier is thrilled too because he was keen to have his long-term future resolved.

“I think this signing demonstrates two things. Firstly, that life at the club goes on despite all of the speculation to the contrary.

“And secondly it demonstrates in very large measure the ongoing commitment of the owners who once again have come good when funds have been needed.”