The crisis in the credit markets is threatening to engulf one of the largest commercial finance companies in the United States.

The CIT Group, a century-old company that lends money to small businesses and midsize corporations, drew on $7.3 billion of emergency bank credit lines on Thursday, causing its shares and bonds to plummet.

CIT, whose businesses range from making student loans to financing purchases of airplanes and railroad cars, announced that it would try to sell some assets or businesses to raise cash and repay its debts. Analysts said the tightening credit squeeze could drive the entire company into the arms of a bidder.

The developments at CIT suggest that the credit troubles that felled Bear Stearns this week continue to spread, despite efforts by the Federal Reserve to encourage banks to lend to other financial companies.

For the first time since the Depression, the Fed has extended credit directly to securities companies in an effort to stabilize the capital markets. The central bank also expanded the types of collateral that companies can use in buying Treasury securities at a government auction next week. The moves helped shore up confidence in the financial system and set off a rally in shares of banks and brokerage companies.

But unlike banks and now Wall Street companies, commercial lenders like CIT cannot borrow from the Fed. And also unlike banks, which use customer deposits to finance the loans they make, lenders like CIT depend almost solely on the capital markets to raise money.

Shares of CIT plunged almost 45 percent in heavy trading on Thursday morning before rebounding during the afternoon amid the broad rally in financial shares. CIT closed down $2.01, or 17.3 percent, at $9.63.

“Tapping bank lines of credit for financials is viewed as very much a rainy day” solution, said Richard Hofmann, an analyst for CreditSights, an independent research firm based in New York. “Its another blow to confidence in the company. They are in a significantly challenging state.”

In announcing its moves on Thursday, CIT said a “protracted disruption” in the credit markets and ratings downgrades meant that it could no longer secure short-term debt financing to pay loans. As a result, CIT said it would draw upon backup financing and might have to sell certain businesses. Analysts, however, said CIT executives might be forced to sell the entire company.

CIT prospered when credit was easy. But its fortunes began to plunge last summer as the credit crisis that began in the market for subprime home mortgages started to spread. The company posted a loss of $132.2 million last quarter, in part because of bad investments linked to subprime home loans. Meanwhile, the credit market crisis has made it difficult for CIT to issue bonds and commercial paper, or short-term IOUs.

Struggling to raise money in the markets, CIT drew upon that entire emergency credit line on Thursday after its troubles intensified. This week, Moodys Investors Service and Standard Poors reduced CITs credit rating, making it even more difficult for CIT to raise money by selling short-term notes to big money market funds, which are typically barred from buying securities that lack high ratings.

CIT has about $8.2 billion of debt and $2.8 billion of commercial paper expected to come due this year. The lender said it planned to use the proceeds from its new financing arrangement to repay those debts and provide financing to its core commercial businesses.

Executives also said they were looking for a “strategic partner,” perhaps a bank with excess deposits, to provide additional money.

Underscoring its challenges, credit default swaps tied to CIT bonds, which reflect the cost of insuring bondholders against the risk that the company will be unable to pay its debts, have risen sharply.

It now costs more than $2.5 million to insure $10 million in CIT bonds.

On a conference call on Thursday afternoon, CIT executives said they expected to raise $5 billion to $7 billion by selling certain “nonstrategic” businesses, which they did not specify. But they ducked a question about their plans to sell the entire company, saying they were “all about shareholder value.”

Analysts said CIT might be quietly seeking out a merger partner. By latching on to a bank, the company would be able to obtain financing in spite of the turbulent markets. CIT executives also stand to benefit: The top five officers will be able to cash out about a total of $50 million in severance and stock, according to James F. Reda Associates. That is more than 60 percent more than in the average company its size.

Finding a potential bidder, though, may be tough. Many natural buyers have their hands full with other acquisitions; others, like Citigroup, have been beaten down by the credit squeeze. Still, the list might include Wells Fargo and HSBC, and big commercial finance players like GE Capital.

ROME: French consumer spending jumped sharply in February and Italian retail sales rose in January, data released Friday showed, but analysts were skeptical about whether euro area consumption was set for a prolonged upturn.

With continued high inflation and fears about the economy weighing on confidence, economists said that Fridays data were more a rebound from previously poor figures than the start of a significant shopping spree on the Continent.

A 7.5 percent rise in French car sales in February - after a 9.2 percent drop in January, when a new emissions law came into effect - was largely behind the countrys 1.2 percent overall increase in consumer spending from the previous month.

That figure was much higher than the 0.5 percent rise that economists had forecast.

Still, analysts warned that French consumer confidence remained weak - a gauge of sentiment for last month released Feb. 28 fell to a 20-year low due to fears about inflation and the economy - pointing to modest consumer spending for the foreseeable future.

“Inflation is at its highest in 16 years, the real estate market is cooling, job creation will probably slow, and theres a negative psychological effect from the troubles in the financial markets,” said Mathieu Kaiser of BNP Paribas.

Those same fears are hitting Italians, where consumer confidence in March fell to its lowest level since May 2004.

The research institute ISAEs seasonally-adjusted consumer confidence index fell to 99 in March, the lowest since May 2004, from a 102.8 in February as Italians fretted about rising prices and personal finances.

“All the main components have worsened, from the prospects for savings to the view on prices and the opportunity for buying durable goods,” said Paolo Mameli, an analyst at the bank Intesa Sanpaolo.

Still, retail sales in Italy rose for the first time in three months in January, up 0.2 percent on the month and 1.0 percent on the year, the statistics office ISTAT said. However, the rise was modest when compared with inflation, which is running at an annual rate of 3.1 percent.

With Italian wage increases well below inflation, Marco Valli at the bank Unicredit MIB said reduced spending power was bound to weigh on consumer spending eventually.

“I would be hesitant to forecast a collapse in consumption,” he said. “There will be a correction or a slowdown - thats pretty much inevitable due to the reduction in disposable income.”

Economists see little on the horizon to lift the confidence of euro area consumers and persuade them to increase spending in the medium term. The German Ifo index for March, due to be released Wednesday, is expected to show a fall for the first time in three months.

At the same time, data from outside the euro area suggest a slightly brighter outlook. On Thursday, the British National Statistics office said retail sales there had jumped 1 percent last month and rose 5.5 percent from a year earlier, confounding analysts who had predicted a 0.2 percent fall.

The data also showed consumers kept on spending despite the fact that shops did not cut prices in February as much as in January, with increased buying of food a major factor.

“With confidence at a 13-year low, real income growth weak and housing wealth falling, its hard to see what is keeping consumers spending,” said Vicky Redwood at Capital Economics. “Yet these figures suggest that they certainly are.”

BUCHAREST: Ford Motor formally took over the Automobile Craiova factory from the Romanian government Friday.

Prime Minister Calin Popescu Tariceanu handed the factorys key to John Fleming, president of Ford of Europe, saying that the automakers investment of about $1 billion would allow Romania to become the biggest car producer in southeastern Europe.

Last year, Ford bought a 72.4 percent stake in the state-owned company, paying about $88 million and vowing to invest $1 billion to upgrade and expand production. Ford said it would increase the number of employees from 3,900 to between 7,000 and 9,000.

“I believe that the presence of two carmakers on our market will encourage interest in others,” Tariceanu said.

The Renault-owned Dacia plant in Romania already produces the popular Logan model and the new Sandero.

Fleming said that the first Ford vehicles - which will be Transit Connect vans - will come out of the factory in 2009. From 2010, the plant will manufacture a small, spacious and cheap car that will be made only in Romania. Fleming declined to give more details about the new model.

From a production of 16,000 cars in 2009, the company expects to reach 300,000 cars in four years.

The takeover was delayed when the European Union launched an investigation into the sale. The EUs executive arm said the stake was worth $132 million and the Romanian state had lost $42 million.

Regulators ordered the government to demand that Automobile Craiova pay the state the lost revenue from the sale. Ford agreed to pay the sum.

The Romanian government took over the debt-laden factory in 2006 after the previous owner, Daewoo Motor of South Korea, went bankrupt in 2000.