Chinese and European leaders were due to plot their next steps on Monday to steer the world economy away from a precipice, while stimulus measures presented, planned or pending propelled stock markets higher.
The U.S. Senate was set to reconvene as White House and Democratic congressional negotiators sought to agree a rescue package for the ailing "Big Three" U.S. automakers including at least $15 billion in loans.
The plan gained urgency after Friday's U.S. employment data showed that more than half a million jobs were lost in November.
Stock markets shot up on hopes that agreement on the package was near, along with hopes of more rate cuts and stimulus measures.
Tokyo's main Nikkei index gained 5.2 percent and European shares were up a similar amount, tracking gains in the United States and Asia.
But a report on Monday that Japan's Toyota Motor Corp was eyeing a sharp cut in capital spending showed how the industry downturn is engulfing all automakers.
OBAMA PLAN
U.S. President-elect Barack Obama unveiled his own stimulus plans over the weekend — featuring the largest U.S. infrastructure investment programme since the 1950s and the creation of 2.5 million jobs, which analysts said could cost at least $500 billion.
A Federal Reserve official said the U.S. central bank was running out of room to cut interest rates, and fiscal policy should play a bigger role in spurring the recession-hit economy.
The Fed is expected to cut its Fed funds rate to just 0.5 percent next week, following a dramatic round of cuts in Europe and Asia.
"Given that interest rates cannot be negative, further monetary policy actions are limited," Boston Federal Reserve President Eric Rosengren said in remarks prepared for delivery to a conference in Geneva, Switzerland.
"Increasingly, many observers and commentators are suggesting that fiscal stimulus will be an important element of economic recovery," he said.
The European Central Bank's Jose Manuel Gonzalez-Paramo was quoted as saying the ECB did not exclude reducing interest rates again in the next few months, following last week's record 75 basis point cut.
EUROPEANS MEET
British Prime Minister Gordon Brown, French President Nicolas Sarkozy and European Commission chief Jose Manuel Barroso were due to meet business leaders in London later on Monday to discuss the economy.
And China's leaders gathered to map out economic policy for next year, state media reported, with the government struggling to shore up growth and jobs as export demand shrinks.
The "central economic work conference" will meet in a closed session to discuss ways to keep annual growth at 8 percent or higher, said a report on the official Xinhua news agency's website (www.xinhuanet.com).
"There is a lot of talk about support measures from China, including buying up more bank shares, a rescue package for the stock market and other steps to boost private consumption," said Peter Lai, director with DBS Vickers.
The EU leaders meet just before a European Union summit in Brussels on Dec. 11 and 12, which will study European Commission proposals to give the sagging economy a sharp boost with a 200 billion euro ($250 billion) spending plan.
Britain and France have announced ambitious stimulus plans to jump-start their own faltering economies. Europe's biggest economy, Germany, is resisting pressure to provide billions more euros to reach the scope suggested by the EU Commission, arguing that its already-launched fiscal programme is enough.
German Chancellor Angela Merkel was not attending Monday's meeting. A German government spokesman denied last week that she had been snubbed.
INDIAN STIMULUS
India also weighed in on the stimulus front, announcing on Sunday a $4 billion package of extra spending to revive growth and shore up confidence knocked by militants' attacks on Mumbai. That followed a full point interest rate cut by the central bank on Saturday.
Australia began handing out more than A$8 billion to consumers, part of a stimulus package unveiled in October. Analysts said the money may not be enough to ward off recession.
"If the government doesn't empower consumers at a time like this, in the midst of global financial crisis, then in fact we will have even greater challenges ahead," Prime Minister Kevin Rudd said.
But a lack of bank-to-bank lending remains at the root of the world economy's problems. Banks deposited 250 billion euros at the European Central Bank overnight, a sign that they are still hoarding money as fears of further bank collapses persist.
Underscoring how its export-dependent economy has been battered by the credit crisis, Japan's current account surplus more than halved from a year earlier.
