Japan, Germany to spend billions to ease recession

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LONDON, Oct 30 (Reuters): Japan and Germany said Thursday they would plow billions of dollars into their economies, hoping to provide a cushion against a deep recession and complement a series of expected interest rates cuts.
Japan, the world's second biggest economy, unveiled a 5-trillion-yen ($51 billion) package of spending measures to support its economy and Germany planned a range of steps worth up to 25 billion euros ($32 billion) to boost business.
"A harsh storm seen only once in 100 years is raging," Japanese Prime Minister Taro Aso told a news conference. "Under such circumstances, I am certain that what is most important is to remove uncertainties from the lives of people.
A leading member of Germany's ruling Social Democrats (SPD) told a newspaper that the government planned to introduce a range of steps to bolster the economy next week.
"All together we are talking about a volume of perhaps 20 billion euros to 25 billion euros," Peter Struck, parliamentary floor leader of the SPD, which shares power with Chancellor Angela Merkel's conservatives, told the Berliner Zeitung.
The package will include support for car makers and building renovation as well as tax breaks enabling companies to write off a share of their investments, German newspapers reported.
Governments are desperate to put measures in place to protect their economies against recession, which Eurozone statistics suggested had hit much of Europe.
Economic sentiment in the 15-nation currency bloc plunged to its lowest level since 1993 in October, official data showed.
"These are very bad. It's a clear signal the euro area is in recession," said Christoph Weil at Commerzbank.
US data later Thursday is expected to show the world's biggest economy shrank in the July-to-September quarter.
Poor corporate earnings and forecasts for 2009 supported the view that the downturn would be long-lasting.
Britain's WPP Group, the world's second-largest advertising firm, said 2009 would be very tough after reporting third-quarter figures in line with expectations.
In Asia, South Korea's Hynix Semiconductor, the world's no 2 memory chip maker, reported its worst quarterly net loss in nearly 8 years, saying the future looks grim.
And two of the largest US auto parts makers, BorgWarner Inc and Tenneco Inc, said the economic crisis would mean more job cuts and plant closings.
The International Monetary Fund (IMF) said it was more worried by the slowdown than market volatility, adding it would propose a new regulatory strategy at next month's meeting of the Group of Twenty (G20) nations.
"The IMF's role as the coordinator of global regulation must be reaffirmed," IMF chief Dominique Strauss-Kahn told French daily Le Monde.
He said the Fund's resources were insufficient to meet requirements over the medium term. Countries have lined up to gain funds from the lender, with Turkey the latest to say it was continuing talks at a technical level on a possible precautionary stand-by agreement.
Across the world, countries are using any means to make sure businesses do not fail.
Russia's state bank said it expected to pump around 5 billion rubles ($183.2 million) into the stock market, sending shares higher.
The government disbursed around $3 billion to billionaire Mikhail Fridman's Alfa Group and state oil major Rosneft to help finance their foreign debts, government and industry sources said.